Agriculture, Food and Rural Affairs Appeal Tribunal 1 Stone 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:

Lockridge et al. v Agricorp

Lockridge et al. v Agricorp 2006 ONAFRAAT 31

STATUTE:

Crop Insurance Act

HEARING:

August 3, 2006

DATE OF DECISION:

August 25, 2006

2006-31

NEUTRAL CITATION:

2006 ONAFRAAT 31

IN THE MATTER OF The Crop Insurance Act (Ontario) and Ontario Regulation 140/96 under the Crop Insurance Act (Ontario) 1996, S.O. 1996, C. 17, Schedule C.

AND IN THE MATTER OF: Appeals to the Agriculture, Food and Rural Affairs Appeal Tribunal by:

Paul A. Lockridge, Newburgh Jack Sutton, Napanee

Michael Hinch, Napanee Robert A. Hannah, Enterprise

Ralph Armstrong, Newburgh Carl J. Craigen, Newburgh

Murray Snyder and Linda Snyder, Yarker

from a decision of Agricorp regarding the adjustment of its claim for its 2005 forage crop under Regulation 380/97 and the Forage Rainfall Plan Insuring Agreement.

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

Appearances:

Fred Thomson, representing the respondent, Agricorp

Paul Lockridge, appellant, representing all the appellants

Linda Snyder, appellant

Carl Craigen, appellant

Ralph Armstrong, appellant

Jack Sutton, appellant

Tim Borho, witness for the respondent

Bill White, witness for the respondent

John Lockridge, witness for the appellants

John Wise, witness for the appellants

DECISION OF THE TRIBUNAL

This appeal was heard in Greater Napanee, Ontario on Thursday, August 3, 2006. The appellants sought a higher payment of crop insurance claims related to their 2005 forage crops from Agricorp. Mr. Paul Lockridge was authorized to represent the appellants not in attendance. Ms. Linda Snyder also acted as a spokesperson for the group in attendance.

Statutory Context

Section 10 of the Crop Insurance Act (Ontario) states:

Referral of disputes

10. (1) If AgriCorp and a person disagree whether the person qualifies for a contract of insurance, except if the disagreement relates to the time during which a person may apply for a contract of insurance or file a final acreage report or its equivalent, or if AgriCorp and an insured person fail to resolve a dispute arising out of the adjustment of a claim under a contract of insurance, either may appeal the matter in dispute to the Tribunal.

Notice of appeal

(2) To appeal a matter in dispute, the appellant shall file a written notice of appeal with the Tribunal and send a copy of the notice to the other party within the time specified by the regulations made under this Act.

Exclusive jurisdiction

(3) The Tribunal has exclusive jurisdiction to hear and determine all appeals arising under subsection (1).

Decision binding

(4) The decision of the Tribunal in an appeal is binding on the parties, 1999, c. 12, Sched. A, s. 7 (2).

Opening Statements

The appellants indicated that there were the following issues for the Tribunal to consider:

• the reliability of the rain gauge data from the Camden East rain station;
• Agricorp’s internal review process;
• The misrepresentation of the insurance coverage in 2005;
• The timeliness of rainfall in forage production.

The appellants advised they were seeking that Agricorp re-calculate their claims based on rainfall data collected from the local Environment Canada weather station.

Agricorp submitted the issues on appeal were whether the appellants had been properly treated by Agricorp; whether the monthly rainfall should be weighted; and the reliability of the data from the Camden East rain station. Agricorp acknowledged that 2005 was one of the driest seasons in recent years and that the forage crop insurance plan did not meet all of the expectations of the customers, however it submitted that the plan did not provide all encompassing coverage. Agricorp submitted that it would explain the insurance application process, the data collection approach to demonstrate that it had met its administrative and legal obligations under the plan.

The Tribunal received and marked each of the parties’ document books. The appellants’ document book was marked as Exhibit A and the Agricorp document book was marked as Exhibit B.

The Evidence

Appellants’ Case

Ms. Linda Snyder testified that there was a severe drought in 2005 which resulted in low yields for soybeans and corn and a poor hay crop on her farm. She said crop insurance claims on soybeans and corn were paid but that Agricorp would not pay the forage claim as it said rainfall in the area was more than the historical rainfall and that monthly rainfall was not weighted. She said Agricorp misrepresented the forage coverage as simple but that she thought the monthly rainfall would be weighted and as a result she did not get the protection that she thought she bought. She referred specifically to an Agricorp Factsheet which used the word “weighted” in the description of monthly rainfall. She also testified that she was not advised of any change in the plan from “weighting” the rainfall. Ms. Snyder explained that a large amount of rain was received on the afternoon of August 31, 2005 but that this had little impact on the forage crop. She stated there was only 17.8 mm of rain in May 2005 which was only 21.5% of the historic rainfall for the month of May. She described the drought conditions as a severe hardship to farm businesses

Mr. Paul Lockridge told the Tribunal that most of the appellants contacted Agricorp in early September 2005 about the record dry summer and at that time were told there would be a payout on forage insurance, but that in October 2005 they were notified that no claim would be paid.

Mr. P. Lockridge pointed to documentary evidence and said an Environment Canada rain station approximately 1-1.5 miles from Agricorp’s Camden East rain station posted total rainfall of 186.6 mm from May through August 2005, whereas the comparable total was 261.2 mm at the Agricorp rain station. He said there were no hills or lakes in the area that would explain such different results. He compared the monthly totals at the two rain stations and pointed out they were similar in May, July and August but different in June. Mr. P. Lockridge said Agricorp representatives had suggested sporadic rainfall could account for the difference and said Environment Canada data had not been verified and could not be used. He used a graph from page 2 of Exhibit A to illustrate the difference in the recorded rainfall between the rain stations.

Mr. P. Lockridge said the appellants were subsequently informed by Mr. Tim Borho that Agricorp had switched them to another rain station.

Mr. P. Lockridge stated that the appellants unsuccessfully attempted to resolve their disagreement with Agricorp through its Issues Review Committee (IRC). He advised that they also sent material to the Minister of Agriculture. He said three of them received replies in December 2005 before Agricorp had completed its investigation and four had received replies in January 2006 after the investigation was completed, despite having all signed the same letter. He said Agricorp had not addressed their concerns with the rainfall data collected at the Camden East rain station. He felt that the IRC had made up its mind before its review meeting had been held.

Mr. P. Lockridge explained the appellants believed the data collected at the Camden East rain station was incorrect as they had spoken to Mr. John Lockridge, the landowner on whose property the rain station was located and he told them that:

• he never saw anyone near the rain gauge all summer
• around June 1st he noticed grass had been pulled around the gauge
• the same day he noticed one of the lid on one of the rain gauges at the rain station had not been replaced properly – one gauge had the top placed flatly on it as usual but the other had the top placed on it on an angle
• the lid was crooked for approximately one month.

Mr. P. Lockridge referred to the February 1, 2006 written statement from Mr. John Lockridge contained in Exhibit A which described his observations at the rain station.

Mr. P. Lockridge submitted that it was Agricorp’s responsibility to ensure the data collected at rain stations is accurate. He said Agricorp claimed it was accurate but he did not know how that could be guaranteed; particularly in light of evidence the lid was askew for a month and the variation between the Camden East and Environment Canada records. He said the appellants asked Agricorp to substitute the data from the Environment Canada station for the Camden East station – as allowed in the policy of insurance - but that its response was to re-assign them to an Agricorp rain station 20 km away. He indicated the appellants do not believe the results from the Camden East rain station. He suggested there was the possibility of a malfunction in the rain gauge. He suggested that the substitute rain station used by Agricorp was not meaningful to the appellants’ farms.

Mr. Carl Craigen said that of all the appellants he farmed the closest to the Camden East rain station which was approximately 330 feet from his hay field. He said he only harvested 320 bales of hay in 2005 but harvested over 1,000 bales in 2006. He said that his high yield in 2006 indicated that it was not winterkill that had reduced the yield in 2005 as he had not fertilized the field.

Mr. Craigen said he informed Agricorp of dry conditions in June 2005 and was told a claim would be paid, but then there was a heavy rain in late August and no claim was paid. He said Agricorp had used Environment Canada data in the past to adjust a previous forage claim that he made. Mr. P. Lockridge pointed to a newspaper article which suggested Mr. Fred Thomson was not questioning the Environment Canada data collected by Mr. John Wise.

Mr. Craigen testified that the Camden East rain station was approximately 50 feet from the road, that the gate to the field was never closed and that three young boys lived across the road.

The appellants in attendance answered questions as a panel. In response to questions by Mr. Thomson, the appellants indicated:

• They had never seen anyone tampering with the rain gauges at the Camden East rain station.
• A factsheet produced by Agricorp indicated weighted actual rainfall would be used, although the calculation showed equal monthly weighting.
• Farmers do not go through the calculations in factsheets unless they have a claim; the factsheet was misleading.

In response to questions from the Tribunal, the appellants indicated:

• The adjustment of the Craigen claim in which Agricorp used Environment Canada data was made under the previous forage insurance program.
• The program was changed two years before and growers no longer kept their own rainfall records.
• Rainfall data collected at the Environment Canada station and by the appellant Mr. Hannah were the same.
• Agricorp had weighted monthly rainfall in the past and it was assumed the current program continued to weight rainfall according to which month it fell.
• In the past Agricorp did not use the big rains at the end of August.
• They would have been concerned about the new Forage Rainfall Plan if it had been explained to them that it no longer included weighting of monthly rainfall.
• Drought was the only insured peril under the Forage Rainfall Plan.
• They were all paid claims when Agricorp transferred them to the North Fredricksbugh rain station. It was never explained to them why they were transferred to that station.
• They had all been visited by Agricorp representative Bill White before signing up for the new Forage Rainfall Plan, although not all could recall the meetings.
• Ms. Snyder believed she received a one page renewal notice, but not a package of information in 2005. Mr. Craigen could not find a copy of the renewal notice but believed he received it as he had paid by credit card over the phone for the insurance coverage.

Mr. John Lockridge testified that:

• He was approached by Agricorp’s Prince Edward County agent about having a rain station placed on his property; the agent had originally been looking at the farm across the road from his but thought it would not be a good site because three young boys lived there.
• One criteria of having your property used is you cannot purchase forage insurance from Agricorp.
• The original site staked out on his property was not visible from the road but Agricorp changed the site, with his permission, and the site used is visible from the road.
• It is usual to see grass pulled up from around the rain station. Agricorp asked him to keep it cut and he did, but in June he noticed that some that he had missed had been hand pulled from around the rain gauge.
• He noticed the silver lid to one gauge was askew the same day he noticed that grass had been pulled. It was the gauge on the north side of the rain station.
• He was on that farm quite often and the lid was crooked for 5-6 weeks before it was affixed properly.
• He had never seen anyone reading the gauge.
• As a rule the boys living across the road were not in his field but the youngest has a four-wheeler and he had caught that boy a few times driving it in his field.
• 2005 was the second year the rain station had been placed on his property.
• He had worked for the Ontario Provincial Police and considered himself to be quite observant.

In response to questions by Mr. Thomson, Mr. J. Lockridge indicated:

• He assumed whoever checked the gauge pulled the grass.
• He did not know if it was the bucket side or the electronic side of the rain station that had the crooked lid. From the outside, the cylinders looked the same to him.
• He had never seen anyone tampering with the rain gauge.

In response to questions from the Tribunal, Mr. J. Lockridge indicated the cylinder was still covered when the lid was askew, but the lid at the top of the cylinder was not flat.

Agricorp Case

Mr. Tim Borho told the Tribunal he was the Account Lead for Livestock, including forage, for Agricorp. He said he administered the Forage Rainfall Plan and it was his job to incorporate changes to the plan, ensure that communications went out to customers and that payments were provided to Agricorp. He said he grew up on a dairy farm, obtained a degree in crop science, worked in agricultural sales and raised dairy heifers and grew forages for six years. He said he took a position with Agricorp in August 2005.

Mr. Borho said the Forage Rainfall Program started as a pilot project in 2000 on Manitoulin Island and in Bruce and Renfrew Counties. He explained it was known as a derivative plan as forage yield was not measured directly; instead rainfall was measured as typically more rainfall leads to higher forage yields. He said that after a point additional rainfall was not helpful and could be detrimental. He explained that the Forage Rainfall Plan was area based so growers were not insuring the growth on their own farms; instead they selected a rain station and their claims were calculated based on the rainfall data collected at that station.

Mr. Borho said Agricorp only insured forage against drought. He stated that factors such as species planted, legume/grass mix, winter weather, soil type, early season moisture and temperatures, amount of daylight relative to cloud cover and management practices could also affect forage yield. He said the Ontario Ministry of Agriculture, Food and Rural Affairs (OMAFRA) reported winterkill in some areas of the province in early May 2005.

Mr. Borho said customers were allowed to select a rain station in their own geographic township or any adjacent geographic township. He said Agricorp did not have rain stations in each geographic township. Mr. Borho explained that geographic townships were used because their borders were fixed whereas municipal boundaries changed.

Mr. Borho confirmed that the insuring period for forage ran from May 1st to August 31st, inclusive. He said Agricorp was required to count the rainfall associated with Hurricane Katrina which fell on August 31, 2005. He said the Forage Rainfall Plan did have daily caps such that anything over 70 mm of rain in a single day was not counted and monthly caps of 125% of historic monthly rainfall. Mr. Borho said Agricorp had to administer its insurance programs as they were written or it would risk losing the support of the federal and provincial governments. He said the two levels of government paid 60% of the premium cost of insurance plans.

Mr. Borho said Agricorp purchased rainfall services from the Ontario Weather Network (OWN), a branch of the University of Guelph. He said it investigated other data sources but some did not provide the information quickly enough and others did not follow as good a maintenance and collection regime as OWN provided. He said OWN staff collected data and maintained the rain stations twice monthly. He explained that electronic data was downloaded into palm pilots and water collected in a bucket was manually measured. Mr. Borho said the electronic data collected included the times and dates that a tipping scale tipped as well as a separate tip counter. He said it took 2 mm of rain to cause the tipping scale to tip.

Mr. Borho said OWN staff had a checklist to go through for each visit to a rainfall station and they make note of any abnormalities they find. He said it was unlikely that there would be a total breakdown of a rain station but that it was possible. In that event, Mr. Borho agreed that Agricorp could substitute data from a different source. He acknowledged that Environment Canada data on historic rainfall was used by Agricorp. He said there was no other source with as much detailed historic data available.

Mr. Borho told the Tribunal that Agricorp calculated forage claims by first determining whether or not the rainfall data, adjusted for the daily and monthly caps, was less than 80% of historical rainfall for the county. If it is then a claim is paid. He explained that Agricorp takes the difference between the actual percentage of historic rainfall and 80%, multiplies this by the level of coverage that the customer has selected and doubles the result to account for higher forage prices and transportation costs.

With regard to the 2005 season, Mr. Borho said:

• April tended to be drier than normal with snow at the end of the month and it was also colder than normal and dry into early May
• It warmed up at the end of May but there was no significant rainfall until July
• It was then wetter than normal for the balance of the season.

Mr. Borho said OWN installed some new rain stations in 2005 but none that would affect the appellants. He said that because of a communication problem regarding the installation of new rain stations and because customers were not reminded of their option to change rain stations in the spring of 2005, Agricorp gave its customers the benefit of the doubt and assigned them to the rain station with the highest claim payments of all the rain stations that they could have chosen in 2005. He said this was why the appellants were re-assigned to the North Fredricksbugh rain station. He confirmed that Agricorp paid a claim to each of the appellants.

Mr. Borho testified that Agricorp had 1,650 forage clients in 2005; that approximately 1,100 received a total of $4.2 million in the first round of claims adjustments and that approximately 900 forage growers received a total of $4.3 million in additional claims when Agricorp re-assigned them to the most favourable rain stations.

Mr. Borho testified that the pilot project that became the Forage Rainfall Plan did have weighting attached to monthly rainfall data – 1.2 for May, 1.0 for June and July and 0.8 for August. He said it ran from 2000 to 2002. He said the monthly weighting was dropped in 2003 when the pilot project became a permanent plan in some parts of the province and that affected growers were notified at that time. He explained that the previous forage insurance plan, SIMFOY, was discontinued in the areas that had the new program in 2003. For Lennox-Addington County growers, Mr. Borho said SIMFOY was discontinued in 2004 and the new plan was offered the same year. He stated that customers were notified that SIMFOY was being discontinued and were instructed to call Agricorp if they wanted to purchase forage insurance under the new Forage Rainfall Plan.

Mr. Borho said the numerical example in the 2005 factsheet produced by Agricorp clearly showed that there was equal weighting to rainfall data collected in each month. He said he recalculated the Camden East data to see if monthly weighting would have made a difference but that the percent of historic rainfall would have been 80.9% - too high to trigger a claim – even if the monthly weighting used in the pilot project had been applied.

Mr. Borho indicated that SIMFOY was significantly different from the Forage Rainfall Program as it tried to calculate a simulated yield based on several environment factors and farm management practices. In contrast, he said the current plan used only rainfall and did not try to simulate yield.

Mr. Borho said the possible substitution of Environment Canada data for the Camden East data was raised at a customer meeting in Picton in the fall of 2005. He said Mr. Craigen raised the matter and that he had an official data log book filled out by John Wise with him at the meeting. Mr. Borho said this caused him concern as to the security of the Environment Canada data. He also noted that the Environment Canada Centreville data submitted to Agricorp’s IRC by the appellants indicated total rainfall of 143.8 mm from May to August 2005, but the data for the same station submitted to the Tribunal was 186.6 mm. He said that he had heard that Environment Canada can change its weather data up to a year after it first posts it on the Internet. He also pointed out a disclaimer on the Environment Canada data that indicated the agency did not guarantee the accuracy, quality or completeness of its data. He concluded it was clear that Environment Canada would not stand behind its data.

With regard to the Agricorp IRC, Mr. Borho said three of the appellants had signed a petition to the Minister of Agriculture, Food and Rural Affairs and their concerns were considered in December 2005, as well as in January 2005 when a letter from all the appellants was considered. He explained this was why letters were sent out separately to the original three. It was determined at the hearing that the three appellants in question had not actually signed the petition to the Minister, although their names and telephone numbers were on the petition. The Chair limited testimony on the activities of the IRC, pointing out that it was outside of the Tribunal’s jurisdiction to deal with that committee.

In response to questions from the appellants, Mr. Borho indicated:

• The electronic rain gauges were battery powered.
• OWN hires and trains its own staff to collect data and operate the rain stations.
• OWN calibrates the units every year. The rain stations have a triple redundancy – the time and date stamp, the tip counter and the manual rain bucket.
• He spoke to OWN staff about its logs for the Camden East station and was told they showed no problems in 2005.
• Rain gauges are not fenced, covered or locked as they need to be in the open to collect accurate data.
• OWN forwards rainfall data to Agricorp monthly and Agricorp tries to post it on its website by mid-month of the following month.
• He did not know if there had been any winterkill claims on the new forage seeding plan.
• He carried crop insurance when he farmed but not on forage.
• He did not calculate the amount of the appellants’ claims using the Environment Canada data.
• OWN staff stationed at Ridgetown College look at data from all three collection methods used in the rain stations and look for discrepancies. They also compare the data to data from nearby stations to look for unusual patterns.
• Agricorp wants rainfall data collected every two weeks, mainly due to the maintenance of rain stations.
• Rain stations on inhabited properties could be more secure but there may be a greater chance of them being hit by a vehicle.
• He probably would work through a sample claim payment calculation before buying a new insurance policy.
• Rain stations could be tampered with.
• He had experienced winterkill; typically low and high areas of a field are hit and forage yields are reduced.
• Agricorp selects sites for rain stations but OWN sets up the gauges.
• When Agricorp relied on Environment Canada data it found it was often late and this delayed claim payments.
• He was not saying that Environment Canada data was not accurate but it will not stand behind the data.
• He was relying on Agricorp files for most of the historic information he provided on the forage insurance plans. He was with Agricorp when the effects of Hurricane Katrina hit the province.
• If there were a problem at a rain station Agricorp could look at surrounding stations to interpolate what happened at that station.
• Agricorp posts information monthly but it receives rainfall data when OWN receives it.
• He thought Mr. Craigen said he had John Wise’s original log book when he spoke at the meeting in Picton.
• Most customers were happy with the pilot project.
• If one side of the lid to the rain gauge was tipped up one inch, but the gauge was covered it would not have much impact on the results if it was the manual collection gauge affected. If it was the cover on the electronic gauge that was askew it would likely reduce the measurement of the rainfall as some water would go to the side rather than land on the tipping scale.
• If kids tipped the scale it would count as if it was raining.
• If he purchased any insurance plan that did not perform as expected he would not be happy.

In response to questions from the Tribunal, Mr. Borho indicated:

• Agricorp is not routinely provided with OWN notes but can get them on request. He had seen a copy of the OWN procedure manual.
• Agricorp has not audited OWN’s procedures since he has been with the agency, but it did spend a lot of time on the 2005 data.
• Agricorp’s contract with OWN says the data is provided for the purpose that it has been requested for and not any other purpose. He was not aware of any other disclaimer.
• Agricorp has a general disclaimer on its website about errors and omissions but not a disclaimer specific to rainfall data.
• The main problem with Environment Canada data was timeliness.
• The counties of Bruce, Renfrew and Prince Edward were the first three counties on the pilot project. Agricorp collected rainfall data itself in 2000.
• Agricorp relies on its own field staff, OMAFRA field staff and local farmers to suggest sites they feel would be appropriate for rain stations. The sites need to be clear of encumbrances and accessible.
• A key difference between the August rainfall results recorded at the Camden East rain station and the Environment Canada station was that there was almost no rainfall recorded at the Environment Canada site on August 31, 2005, the day of the Katrina effect.
• He received a call from a client in nearby Bastard Township early on August 31, 2005 as the client was concerned about the effect that Katrina would have on his claim.
• For customers that were enrolled in the SIMFOY plan, Agricorp sent letters early in the switchover year – 2004 for these appellants – indicating that SIMFOY was discontinued and to call for more information and to get enrolled in the new program. Brand new customers would contact Agricorp or talk to Agricorp staff at various functions. Agricorp staff would put a value on a customer’s forage crop and the customer would select a rain station.
• There was no reference to monthly weighting in information sent by Agricorp about the new program in 2004.
• Under the Forage Rainfall Plan, rainfall data is used as an indicator of what yield could be.
• For 2005, the historic data used by Agricorp ended in 2002 as it did not have more current data from Environment Canada. It now uses its own data in combination with Environment Canada data.
• OWN had 350 rain stations dedicated to Agricorp. Some stations were missing data on the electronic side in 2005 and manual data was used as a back up.
• The rain gauges are mechanical devices and are not infallible.

In response to follow up questions by the appellants, Mr. Borho indicated a number of different weather items were taken into account under the SIMFOY plan. He said he was not familiar with Environment Canada procedures related to evaporation.

Mr. Bill White testified that he was an adjuster for Agricorp and also sold crop insurance in the spring. He said he had been with Agricorp for 18 years. Mr. White said he was familiar with all the appellants as he had signed them all up for the Forage Rainfall Plan and had adjusted crop insurance claims for some of them. He identified from Exhibit B all of the forage crop insurance applications of the appellants that he had witnessed.

Mr. White said when he sold forage insurance he estimated the total value of the forage crop that could be grown by the customer and the customer could choose to purchase a minimum $2,000 coverage or any coverage level up to the value of the crop. He said the premium was 3.56% of the coverage selected and he collected premium cheques when he signed up customers. Mr. White stated that he provided a list of rain stations and a map to prospective customers and they chose the rain station to be used. He stated that it was his practice to advise customers to pick the rain station that best reflects their own geography, land and rainfall. He said geographic townships were shown on the map and the customer could pick a rain station in their own geographic township or an adjacent one.

Mr. White indicated he believed the appellants understood the Forage Rainfall Plan when he sold it to them and he had not had any questions about the plan from any of them since. He said he never discussed monthly weighting with the appellants as it was not part of the Forage Rainfall Plan. He said he had not sold the pilot project. He said he sold SIMFOY prior to 2004 and the Forage Rainfall Plan since 2004.

Mr. White told the Tribunal that a lot of customers insure less than their eligible coverage and that affects their claim payment. He also said there is a 20% deductible as claims are only adjusted if less than 80% of historic rainfall is received. Mr. White said he spoke to one of the appellants in May 2005 about the dry weather but that if he had said anything about a claim he would have qualified it by saying if the other months were as dry then a claim would be paid out at 80%.

Mr. White said he has consulted farmers about potential rain station sites. He said Agricorp tried to put the sites near a group of farmers in a clear area away from a river or lake. He said contracts were made with landowners receiving rain stations and they were each paid $100 per year. He said Agricorp would not knowingly select a site where the results would be skewed.

In response to questions from the appellants, Mr. White said:

• He had heard discussions about malfunctioning rain stations, mainly among farmers.
• He had heard from Mr. Borho that data could be substituted at one rain station.
• He did not see data from rain stations himself; that information was sent to Mr. Borho.
• The Forage Rainfall Plan was a new program, not a change to SIMFOY.
• He may have left a copy of the historical rainfall data chart with customers who enrolled in the Forage Rainfall Plan.
• He told Mr. Craigen he did not need to collect rainfall data any longer as a scientific gauge was used.
• The rain station on the John Lockridge farm may have been relocated for ease of access.
• OWN looks after the gauges, not Agricorp; he had never seen the gauge on the John Lockridge farm.
• He did not know monthly rainfall data was weighted in the pilot program.
• Agricorp did not come out and look at forage crops that might be in a claim situation.

In response to questions from the Tribunal Mr. White indicated:

• His sales territory was Prescott to Darlington; he adjusted claims in Peterborough County, Hastings County and part of Northumberland County.
• He agreed there was a drought in the sales area in 2005.
• The 3.56% premium for the Forage Rainfall Plan is the same across the province.
• Reading the Agricorp factsheet the phrase “weighted actual rainfall as percentage of historical rainfall” could mean equal weighting or weighting in some way that was not equal. No one had ever asked him about the term when he was selling the insurance policies.
• He was familiar with the weighting used in SIMFOY.
• The factsheet was sent out with the renewal notices in 2005.

In response to follow up questions, Mr. White said a checked box on application forms which indicated no additional information was attached meant that the customer had only applied for insurance on forage, not any other crops. He said he felt he had explained the Forage Rainfall Plan properly.

Appellants’ Reply

Ms. Snyder explained that the difference in the Environment Canada data provided to the IRC and the Tribunal was explained because the Katrina rainfall data was not included in the information originally sent to Agricorp. She explained that it was widely believed at the time that the Katrina data would simply be dropped by Environment Canada and that was the original reason for the differences in rainfall amounts submitted by the appellants in correspondence with Agricorp.

Mr. John Wise told the Tribunal he was a farmer with an interest in the weather and had been a volunteer weather observer for Environment Canada for over 20 years. He said he operated Environment Canada’s Centreville station. He said he took temperature and precipitation readings twice a day and in 2005 sent the information to Environment Canada monthly on a written sheet. He explained it was now sent daily, by computer.

Mr. Wise said he sent in raw data to Environment Canada. With regard to the Katrina effect he said he originally entered 25 mm extra rainfall on September 1, 2005 but changed it as he realized it actually fell on August 31, 2005. He did not know who made the assumption about dropping the Katrina data. He said he heard that from farmers, not Environment Canada.

Mr. Wise said his original data goes to Environment Canada in Toronto and he had loaned Mr. Craigen yellow carbon copy sheets of his monthly reports to take to the meeting in Picton. He said he has never been told not to share this data and often speaks to reporters about the weather if they telephone him. He agreed it was November when he gave the data to Mr. Craigen and the originals were in Toronto by then.

Mr. Wise said Environment Canada provides him with a funnel type rain gauge, mounted on a stake and once or twice a year its technician comes to check that the gauge is level. He said the gauge was not automated.

In response to questions from the Tribunal, Mr. Wise agreed there was significant rainfall recorded on August 30, 2005 on the Environment Canada website summary of information collected at the Centreville station while his hand recorded data sheets for that day showed no precipitation (Exhibits A and B). He said his recorded data looked like 42.2 mm was recorded on August 31, 2005 whereas the Environment Canada website reported 5.2 mm for August 31, 2005.

Summations

Mr. P. Lockridge told the Tribunal that Agricorp can choose an alternative source for rainfall data in the event of a malfunction and there were unexplained circumstances around the Camden East rain station in 2005 and there was a possibility of damage to the rain gauge. He submitted that the IRC process has failed the appellants. Ms. Snyder said the appellants would like the Tribunal to require Agricorp to replace its data with the rainfall data collected at the Environment Canada Centreville site. She also asked for compensation for the appellants time spent on the IRC process.

Mr. Thomson said there was no doubt there was drought in 2005 and that the contract of insurance did not meet the appellants’ expectations, but he submitted it is a legally binding agreement. He argued there was no evidence that Agricorp led people astray on the issue of monthly weighting. He said Mr. White had visited each customer when signing them up for the new Forage Rainfall Plan and submitted that both the customers and Agricorp have to share responsibility to make sure that they understand the contract of insurance.

Mr. Thomson said Agricorp had explained why it preferred OWN data to other data and suggested that Agricorp had no interest in not paying claims. He asked the Tribunal to dismiss the appeals.

The Findings

The issue before the Tribunal is should the appellants’ crop insurance claims be adjusted upward due to:

1. The accuracy of rainfall data collected at the Camden East rain station
2. Agricorp’s refusal to use a weighted average rainfall measurement system

With regard to the accuracy of the rainfall data at the Camden East station, the Tribunal heard testimony that the lid on one of the rain gauges was skewed for 5-6 weeks and other testimony that OWN reported no problems with that station in 2005. As well, the appellants raised concerns that three boys living in the area of the rain gauges may have tampered with them, although there was no evidence brought forward to support this.

The Tribunal was not convinced that the Camden East rain gauges were tampered with – there is simply no evidence to support that suspicion. Although there is some variability between the rainfall data collected at the Camden East station and other rain stations in the area, there was not enough variability to lead the Tribunal to conclude the Camden East rain station was improperly recording.

The appellants took the position that data from the nearby Centreville Environment Canada rain station should be substituted for the Camden East data. The Tribunal rejects the use of that data as it has concerns with the reliability of the Environment Canada data, as the documentation presented to the Tribunal showed a discrepancy in the rainfall data reported by Mr. Wise and the rainfall data reported by Environment Canada.

Mr. Borho testified that the appellants were all re-assigned to the North Fredricksbugh rain station because Agricorp had not fully communicated all of their rain station options. The North Fredricksbugh rain station provided them with the highest claim payments out of all the rain stations that they could have chosen in 2005. The Tribunal finds this is the appropriate rain station to use in adjusting the appellants’ claims as this treats them in a similar manner to other growers who did not have their rain station options fully explained to them.

The second issue is should the claims be adjusted using a monthly weighting methodology that was apparently used in a pilot project. The Tribunal finds that there was no monthly weighting provision in the 2005 Forage Rainfall Plan. The Tribunal does not have the jurisdiction to order that crop insurance claims be adjusted on a basis other than that set out in the contract of insurance

With regard to the request for compensation/costs, the Tribunal notes that it 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 conduct to warrant the award of compensation/costs in this matter.

Decision and Reasons

After careful consideration of the evidence and submissions made, the Tribunal dismisses the appeals of Paul A. Lockridge, Jack Sutton, Michael Hinch, Robert A. Hannah, Ralph Armstrong, Carl J. Craigen, and Murray and Linda Snyder.

The reasons for this decision are:

1. The Tribunal is not satisfied that there was sufficient evidence to support the appellants’ challenge to the reliability of the data from the Camden East rain station. In any event, the appellants’ claims were all adjusted using data from the North Fredricksburgh rain station which was the highest paying rain station in the vicinity.

2. The Tribunal is not satisfied that the data from the Environment Canada Centreville weather station is reliable enough to be used in the adjustment of the appellants’ claims.

3. The Tribunal is satisfied that none of the appellants were mislead by Agricorp in respect of how the rainfall for each month of the insured period was to be “weighted”.

4. The Tribunal does not have jurisdiction to address any perceived deficiencies in the Agricorp IRC process nor to award a party costs or compensation in respect to the IRC process.

DATED AT Guelph, Ontario this 25th day of August, 2006.