Ontario Halal Meat Packers Inc. v Ontario Sheep Marketing Agency, 2006 ONAFRAAT 40

Agriculture, Food and Rural Affairs Appeal Tribunal

1Stone Road West

Tribunal d’appel de l’agriculture,

de l’alimentation et des affaires rurales

1 Stone Road West

Guelph, (Ontario) N1G 4Y2

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

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

Guelph (Ontario) N1G 4Y2

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

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

AGRICULTURE, FOOD AND RURAL AFFAIRS APPEAL TRIBUNAL

APPEAL:

Ontario Halal Meat Packers Inc. v Ontario Sheep Marketing Agency

Ontario Halal Meat Packers Inc. v Ontario Sheep Marketing Agency

2006 ONAFRAAT 40

STATUTE:

Ministry of Agriculture, Food and Rural Affairs Act

HEARING:

September 27, 2005

DATE OF DECISION:

October 27, 2006

2006-40

NEUTRAL CITATION:

2006 ONAFRAAT 40

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

AND IN THE MATTER OF:

An Appeal to the Agriculture, Food and Rural Affairs Appeal Tribunal by Ontario Halal Meat Packers Inc. Milton, Ontario from a decision of the Ontario Sheep Marketing Agency to:

1. Order the company to pay license fees and finance charges totalling $8,029.65;

2. Fine the company $1,000.00;

3. Require the company to pay these fees, charges and penalty according to a schedule such that one third is paid by June 23, 2006, one third is paid by July 31, 206 and the balance is paid by August 31, 2006, or face a further fine of $10,000.00.

Before:

Cor Kapteyn, Vice Chair; Bill Schaefer, Member; Graeme Hedley, Member

Appearances:

Mr.Costa Abinajem on behalf of Ontario Halal Meat Packers Inc., appellant

Mr. Paul Trudell, counsel to the Ontario Sheep Marketing Agency, respondent

Mr. Pierre Adrian, witness for the respondent

Mr. Bob Connelly, witness for the respondent

DECISION OF THE TRIBUNAL

This appeal was heard in Guelph, Ontario on September 27, 2005. Ontario Halal Meat Packers Inc. (OHMPI) appealed to the Agriculture, Food and Rural Affairs Appeal Tribunal (the Tribunal) from the decision of the Ontario Sheep Marketing Agency (OSMA) which ordered the company to: pay license fees and finance charges totalling $8,029.65; pay a fine of $1000.00 and to make payment of the fees, finance charges and penalty according to a schedule such that one third is paid by June 23, 2006, one third is paid by July 31, 2006 and the balance is paid by August 31, 2006, or face a further fine of $10,000.00 and an immediate suspension of the slaughter license for Ontario Halal Meat Packers Inc.

Statutory Context

Section 16(2) of the Ministry of Agriculture, Food and Rural Affairs Act R.S.O. 1990, Chapter M. 16 states that:

Subject to subsections (4) and (5), if a person is aggrieved by an order, direction, policy, decision or regulation made under the Farm Products Marketing Act by a local board or under the Milk Act by a marketing board, that person may appeal to the Tribunal by filing with the Tribunal and sending to the local board or marketing board written notice of the appeal. R.S.O. 1990, c. M.16, s. 16 (2); 2006, c. 19, Sched. A, s. 16 (3).

Section 6 of Regulation 429 to the Farm Products Marketing Act states that:

6. The Commission delegates to the local board its powers to make regulations with respect to sheep and wool,

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

(a.1) prescribing or providing for classes of licences and the imposition of terms and conditions on any class of licence;

(a.2) providing that the local board may impose terms and conditions upon a licence or any class of licence;

(b) prohibiting persons from engaging in the producing, marketing or processing of sheep or wool except under the authority of a licence and in compliance with the terms and conditions of the licence;

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

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

(ii) if the applicant or licensee has failed to comply with or has contravened any provision of the Act, the regulations, the plan or any order or direction of the Commission or local board;

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

(e) providing for the fixing of licence fees and the payment thereof by any or all persons producing or marketing sheep or wool and the collecting of the licence fees and their recovery by suit in a court of competent jurisdiction;

(f) requiring any person who receives sheep or wool to deduct from the money payable for the sheep or wool any licence fees payable to the local board by the person from whom the sheep or wool are received and to forward such licence fees to the local board;

(g) requiring any person who produces and processes sheep or wool to furnish to the local board statements of the amounts of sheep or wool produced in any year and used for processing;

(h) prescribing the form of licences;

(i) providing for the exemption from any or all of the regulations, orders or directions under the plan of any class, variety, grade or size of sheep or wool, or any person or class of persons engaged in the producing or marketing of sheep or wool or any class, variety, grade or size of sheep or wool;

(j) requiring the furnishing of security or proof of financial responsibility by any person engaged in the marketing of sheep or wool and providing for the administration and disposition of any money or securities so furnished;

(k) providing for the control and regulation of the marketing of sheep and wool, including the times and places at which sheep and wool may be marketed;

(l) providing for the control and regulation of agreements entered into by producers of sheep or wool with persons engaged in marketing or processing sheep or wool and the prohibition of any provision or clause in such agreements;

(m) requiring any person who produces sheep or wool to offer to sell and to sell the sheep or wool through the local board;

(n) prohibiting any person from processing, packing or packaging any sheep or wool that has not been sold by or through the local board;

(o) providing for the making of agreements relating to the marketing of sheep or wool by or through the local board, and prescribing the forms and the terms and conditions of such agreements; and

(p) providing for the making of such orders and the issuing of such directions as are necessary to enforce the due observance and carrying out of the Act, the regulations, the plan or any order or direction of the Commission or the local board. R.R.O. 1990, Reg. 429, s. 6; O. Reg. 256/94, s. 1.

Section 4(1) and 4(2) of the Ontario Sheep Marketing Agency General Regulation (Sheep) states:

SECTION 4: - LICENSE FEES

S.4

(1) General:-

(a) Every person shall pay to the Agency license fees on the sale, slaughter or otherwise marketing of live sheep at such times and on such terms as may hereinafter be provided.

(b) Every person required to pay or remit license fees shall forward same directly to the Agency at its office, 130 Malcolm Road, Guelph, Ontario, N1K 1B1.

(c) License fees are currently payable at the rate of $1.55 per head, plus 7.0% GST, on the sale, slaughter or otherwise marketing of live sheep.

(d) Save as hereinafter provided, such license fees must be received by the Agency as aforesaid, not later than the last day of the month following the sale, slaughter or otherwise marketing of live sheep.

(2) Processor Requirements:-

(a) Save as hereinafter provided, every Processor shall pay prescribed license fees on every sheep or lamb slaughtered on its own behalf or on behalf of any other person;

(b) Save as hereinafter provided in paragraph (c), every Processor who purchases sheep shall deduct and remit from the monies otherwise payable to the seller, the prescribed license fees owing to the Agency, not later than fifteen (15) days following the last day of the month in which the sheep were slaughtered, or if invoiced by the Agency, not later than 30 days after the invoiced date;

(c) A Processor shall be exempt from the payment of license fees in connection with the slaughter of any sheep purchased by the Processor in its own name from the Agency, or from a Livestock Auction Market Operator.

(d) Processors who custom slaughter sheep owned by Producers or other persons, shall collect prescribed license fees from those Producers or other persons by the addition of said license fees to the slaughter fees, and said license fees shall be remitted by the Processor to the Agency not later than fifteen (15) days following the last day of the month in which the sheep were slaughtered, or as may be otherwise authorized in writing by the Agency;

(e) Each Processor shall complete and file with the Agency, an Abattoir License Fee Report in the prescribed form, at such times as may be required by the Agency.

Preliminary Matter

Mr. Costa Abinajem, representative for OHMPI, made a request for adjournment of the hearing. He stated that he is not of the Islamic faith and therefore he was not aware that the hearing date (rescheduled from July 26, 2006) fell during the religious holiday of Ramadan. He explained that his client, Mr. Sardar Shaniwazi, would be under too much physical strain to attend the hearing as his religious beliefs required that he fast daily, during the period of Ramadan.

Mr. Abinajem told the Tribunal that he had intended to call Mr. Shaniwazi as a witness. He stated that he did not have sufficient time to review the OSMA’s billing records as he was certain that doing so would confirm that more errors were made; he had identified one instance where an error in the OSMA’s records had been made. Mr. Abinajem requested that the hearing be rescheduled to some time after the month of Ramadan.

In response to a question from the panel, Mr. Abinajem stated that his client had been properly notified of the hearing.

Mr. Trudell responded to the request for adjournment; he stated that he was opposed to adjourning the hearing. He referred to the decision of the Chair of the Tribunal on the matter, dated September 18, 2006. He stated that the request for adjournment had already been dealt with. He acknowledged the ritual of Muslim fasting during Ramadan. He said that he had spoken with Mr. Shaniwazi the day before (September 26, 2006) and that he believed that Mr. Shaniwazi was attending to his business as usual. Mr. Trudell explained to the Tribunal that observance of Ramadan did not preclude the carrying on of business or the taking of nourishment at some time of day or night by those observing the ritual fast.

Mr. Trudell reminded the Tribunal that today’s hearing date rescheduled from July 26, 2006 was chosen at the request of the appellant. He stated that the Notice of Rescheduled Hearing was issued by the Tribunal in August providing ample time for the appellant to request an adjournment before today’s proceeding. He told the Tribunal that Mr. Shaniwazi’s absence from the hearing was unexplained as there was no indication that he was ill. Mr. Trudell stated that the request for adjournment in order to gain more time to prepare for the hearing, was the second such request made by the appellant. He stated that initially, the deadline for document submissions was July 17, 2006 in preparation for the July 26, 2006 hearing, however, the appellant’s first request for adjournment was granted; the appellant had more time as a result to obtain and review copies of the documents to be relied upon by the OSMA’s witness, Mr. Pierre Adrian. Mr. Trudell submitted that the OSMA wished to proceed with the hearing.

The Tribunal adjourned to consider the submissions on the request for adjournment and decided to continue with the hearing. The Tribunal understood that the appellant had made a request for adjournment of the hearing initially scheduled for July 26, 2006 which was granted, and that the appellant agreed to reschedule the hearing to September 27, 2006. There was ample time for the appellant to have realized the oversight of having rescheduled the hearing to a time that was not convenient to attend. The Tribunal was not convinced that the appellant was not provided with sufficient time to prepare for the rescheduled hearing. There was no evidence to indicate that the appellant’s attempts to prepare for the rescheduled hearing were frustrated to the extent that more preparation time was needed. The request for adjournment was denied. The Tribunal decided to proceed with the hearing.

After a brief adjournment which permitted the parties to discuss some matters that they felt could be resolved, and to provide Mr. Abinajem with the opportunity to prepare documentary submissions, the hearing continued.

Per the Notice of Rescheduled Hearing, the appellant had not delivered any documents that he intended to rely on by September 18, 2006 to the Tribunal or to the OSMA, therefore, Mr. Trudell was afforded the opportunity to review the documents. Mr. Trudell consented to the documents being admitted as evidence. The document brief submitted by the OSMA was listed as Exhibit 1; the document brief submitted by the appellant was listed as Exhibit 2.

The Issue

Should the Tribunal rescind the decision of the Ontario Sheep Marketing Agency to collect license fees and finance charges over a three months period, and to fine Ontario Halal Meat Packers Inc.$1000.00, and to fine it a further 10,000.00, if it does not comply with the payment schedule and initial $1000.00 fine and an immediate suspension of the slaughter license for Ontario Halal Meat Packers Inc.?

Opening Statements

Mr. Costa Abinajem made his opening remarks stating that he had conferred with Mr. Bob Connelly just prior to the commencement of the hearing and that they had come to an agreement on some previously disputed figures. He stated that he believes that the records of the Ontario Ministry of Agriculture, Food and Rural Affairs (OMAFRA) listing number and species of animals slaughtered by OHMPI contain errors. He said that he intended to pursue the issue of penalty and the degree of his client’s culpability in the matter before the Tribunal. Mr. Abinajem told the Tribunal that his client and the OSMA were in agreement on some issues. He reiterated that he did not have enough time to make a necessary review of the OMAFRA documents.

Mr. Trudell made his opening remarks stating that OHMPI and the OSMA had come to an agreement with regard to the disputed number of slaughter exemptions. He stated that the amount of fees outstanding should be reduced by $374.82 bringing the total amount outstanding to $10,724.54 He submitted that he intended to lead evidence with respect to the accuracy of the figures listed in OMAFRA’s records. Mr. Trudell told the Tribunal that Mr. Abinajem had indicated that there was no dispute with respect to the appellant’s non compliance with the requirement of submitting monthly slaughter reporting forms.

Mr. Trudell told the Tribunal that the OHMPI had pled guilty to the charges being appealed to the Tribunal at a hearing held by the OSMA May 31, 2006. He submitted that Mr. Bob Connelly would provide evidence with respect to his efforts to collect license fees from the appellant. He stated that in the time period from April 2006, when the OSMA first levied charges against OHMPI, until today’s proceeding, there had been no attempt by the appellant to review or produce documents pertaining to the charges against him. Mr. Trudell explained to the Tribunal that he had invited the appellant to attend at the OSMA offices for an exchange of documents and to discuss any requests for documents, however, the appellant showed no interest in doing so until the commencement of today’s hearing. Mr. Trudell reminded the Tribunal that the Notice of Rescheduled Hearing ordered that the parties submit and exchange all documents that were to be relied upon at the hearing by September 18, 2006, and that the OSMA took exception to the appellant not having done so until the day of the proceeding.

The Evidence

Costa Abinajem

Mr. Abinajem submitted a signed authorization from Mr. Sardar Shaniwazi, President, OHMPI indicating that he was authorized to represent OHMPI.

Mr. Abinajem apologized on behalf of the appellant, for not submitting documents as provided for in the Notice of Rescheduled Hearing. Mr. Abinajem submitted that:

• He questions the accuracy of the OSMA invoice for March 2006, (tab 7 Exhibit 1) which indicates that OHMPI purchased a total of 552 sheep from the stockyard and slaughtered 449; leaving a carry over of unclaimed exemptions of 103 head into the month of April. It is highly unlikely that OHMPI had purchased and slaughtered the number of sheep indicated, based on OMAFRA’s records.
• OHMPI requests that the OSMA consider exempting additional license fees based on the 103 head of sheep exempt as indicated on the March 2006 invoice as carried over into April.
• If there are inaccuracies in the March 2006 invoice figures, there are probably inaccuracies in the figures listed on invoices for all months invoiced.
• He has not verified any figures with OMAFRA meat inspectors who were present in the processing plant during slaughter.
• Log books containing the number of animals slaughtered are not kept in the processing plant anymore.
• He anticipated obtaining copies of the log book entries from Mr. Adrian on the day of the hearing as it was not possible to do so at any other time.
• OHMPI is a custom kill and wholesale operation. There are a number of clients from whom OHMPI has not been able to collect payment for services/products.
• It is an expected cost of doing business that taxes owed to the government can remain un-remitted by the business operator due to the recovery of bad debt from customers.
• OHMPI requests that the amount outstanding in license fees payable to the OSMA be reduced by the amount outstanding due to non payment by OHMPI clients.
• Two cheques (submitted as Exhibit 2) indicated that clients owed OHMPI $3,015.00 from November 6, 2004 and $1,740.00 from June 11, 2005 respectively.
• He acknowledged that his evidence was hearsay.
• When OHMPI attempted to negotiate the cheque in the amount of $1,740.00, it was informed that the account on which it was drawn was closed.
• If the OSMA were in a similar situation to OHMPI where it was unable to collect fees from clients, it would in turn, refuse to remit any obligatory fees to both levels of government.
• The government has the authority to review the records of the OSMA and OHMPI.
• Custom slaughter requires the client to purchase sheep from the stockyards. The purchase price paid to the stockyard includes the OSMA license fees.
• It is unfair to require that the custom processor collect the OSMA license fees from third party wholesalers when they have purchased the sheep from a stockyard operator. He asked the tribunal to rule that OHMPI should not have to collect license fees in such instances.
• The OSMA is in agreement with OHMPI that there are errors in OHMPI slaughter records. OHMPI is confident that if given more time to prepare its case, it would be able to identify where errors in records were made by OMAFRA and the stockyards.

Mr. Abinajem responded to questions. He stated that:

• With respect to the invoice figures for sheep purchased (Exhibit 1, tab 7, March 2006 invoice) OHMPI counted a total of 54 sheep purchased in the last two days of March 31, contrary to the 103 sheep indicated on the invoice. OHMPI could not have slaughtered 103 sheep in two days.
• As a professional accountant it is his practice to review figures. The March 2006 invoice is the only invoice that he suspected contains errors.
• OHMPI keeps records of slaughter; however they have not been presented as evidence in the appeal.
• He first noticed the discrepancy in the number of sheep recorded as purchased in the March 2006 invoice, during the week of September 18, 2006. The discrepancy went unnoticed because OHMPI records do not contain figures on the number of sheep slaughtered; its records are based on the value of sheep slaughtered, in Canadian dollars.
• His client, Mr. Shaniwazi was not present to address the issue of reviewing records in the week of September 18, 2006 as opposed to beginning a review at the time that the initial charges were assessed.
• Mr. Shaniwazi has difficulty negotiating written documents; therefore, he did not report any discrepancies in the number of sheep slaughtered within 30 days, as noted on the invoice.
• He is not familiar with the day to day operation of the processing plant. He has no information with respect to Mr. Connolly’s attempts to obtain information from Mr. Shaniwazi.
• Mr. Shaniwazi does not inform his customers requesting custom kill that the $1.55 per head license fees payable to the OSMA, must be paid at point of processing. Mr. Shaniwazi includes the fee in his custom processing price structure.
• Mr. Shaniwazi collects the license fees from custom slaughter customers; however, due to financial difficulties he does not remit the fees to the OSMA.
• Mr. Shaniwazi’s financial difficulties arose due to pressures felt by all meat industry stakeholders and recent improvements in plant safety and meat quality which cost $300,000.00. The improvements were mandatory under federal and provincial statutes.
• Mr. Shaniwazi has never taken the position that he refuses to remit license fees to the OSMA; he is unable to pay.
• Although Mr. Shaniwazi has not made payment on outstanding license fees, he continues to slaughter sheep.
• OHMPI had proposed making payment to the OSMA in return for the OSMA’s agreement to adjourn the hearing. Payment was in the form of postdated cheques and one cheque was payable immediately.
• The cheque dated November 6, 2004, submitted with respect to the issue of bad debt (Exhibit 2) is not precisely a non negotiated cheque; it was submitted as an example of bad debt only. The November 6, 2004 cheque does not pertain to the time period of December 2004 to March 2006; the timeframe to which the infractions under appeal were alleged to have occurred.
• There is no evidence to indicate what the cheques submitted as Exhibit 2 are in payment for, nor is the status of the negotiability of the cheques evident.
• Mr. Shaniwazi could not explain why he was not remitting license fee payments to the OSMA.
• He understands that there is legal provision for exempting someone such as Mr. Shaniwazi from making payments if he is unable to collect payment from his customers.
• He is not aware of Mr. Shaniwazi having returned any invoices to the OSMA during the period of December 2004 to March 2005.
• With respect to the disputed number of sheep slaughtered in March 2006 (as recorded on the invoice for March 2006, Exhibit 1, tab 7) he does not know if the records of slaughter for March were ever reconciled.
• As a professional accountant his practice is to verify figures listed on original documents. He believes that March 2006 invoice figures are inaccurate because he has not obtained any documents with which to compare them.
• He believes that OMAFRA records are inaccurate; indicating a greater number of sheep slaughtered in March 2006 than were truly slaughtered. He believes that errors in the March 2006 invoice are indicative of the existence of errors in other invoices.
• The amounts of money stated on each cheque submitted as Exhibit 2, indicate the cost of custom processing which includes the license fee of $1.55 per head, remittable to the OSMA.

Pierre Adrian

Mr. Pierre Adrian testified before the Tribunal. He stated that he has been an OMAFRA Area Manager for meat inspection for two years. Mr. Adrian stated said that the OSMA has consulted with him with respect to OHMPI’s slaughter records. He said that at no time had the appellant contacted him to request information or a review of OHMPI’s slaughter records. He explained the process for recording and verifying slaughter records and stated that:

• The slaughter records as submitted in the OSMA document brief (Exhibit 1, tab 5) are a copy of records stored on computer. The records pertain to the timeframe under appeal and were printed at the request of the OSMA.
• A Meat Hygiene Officer/Inspector is present in the plant during all times that animals are slaughtered.
• The Meat Hygiene Officer/Inspector lists the number and type of animals slaughtered in the plant log book. The entries in the log book are endorsed by the the attending officer In larger plants where the presence of more than one officer is required log book entries are made and endorsed by only one officer.
• At days end, the officer loads the data from the log book onto a computer where all officers’ data is stored. Each week the officers’ data is loaded onto the server to be made available to OMAFRA staff.
• Area Managers are responsible for reconciling hard copy slaughter data with the data recorded on the computer.
• The data is reconciled and checked for accuracy.
• As Area Manager, he and the Meat Hygiene Officers/Inspectors who report to him follow these procedures and there is no indication that proper procedure was not followed.
• The OSMA is sent a copy of the slaughter data for each abattoir each month.
• Prior to becoming Area Manager, he was a Meat Hygiene Officer/Inspector from 1999 to 2004. He has experience in recording slaughter data at the plant level.
• The system of recording data is accurate. He has no indication that the reproduction of the data from OMAFRA slaughter records (Exhibit 1 tab 5) is inaccurate.
• Anyone may review the slaughter data collected by OMAFRA upon request.
• The appellant had never made a request to review the OMAFRA slaughter data.

Mr. Adrian responded to questions. He stated that:

• During his tenure as a Meat Hygiene Officer/Inspector he did not work at the OHMPI plant. As Area Manager, his territory does not include the OHMPI plant.
• A hard copy of the plant log is sent to the Area Manager each month: the Area Manager will compare the computer data entered by the attending Meat Hygiene Officer/Inspector against the log entries to identify any discrepancies.
• If a data discrepancy is identified, the Area Manager contacts the Meat Hygiene Officer/Inspector or the data system operators for clarification. The log book entry is referred to as the authoritative document in instances where a discrepancy arises.
• He understands that OHMPI has one attending Meat Hygiene Officer/Inspector present on days when animals are slaughtered; however, two officers may be on duty on very busy days.
• If more than one officer is present, the practice is to have only one officer record data in the log book. The officers make their own arrangement with respect to who will enter data into the log book during the day.
• During his tenure he has identified clerical errors and omissions to data, however, he has never seen a case where the attending officer(s) has made a double entry in the log book.
• The log book remains in the plant for up to three months; during this time the plant operator may review the entries it contains. When the log book is filled, it is stored at OMAFRA Head Office after remaining in the plant for a short time period.
• A copy of the completed log book is filed with the appropriate Area Manager.
• It appears from the OHMPI slaughter records that the bulk of its business is the slaughter of sheep.
• It is possible to make an error in distinguishing the carcasses of sheep and goats; however, it is highly unlikely that sheep and goats are not correctly identified during ante-mortem inspection. All animals are inspected ante-mortem, this reduces the chance of mixing up the species.
• Goats carcasses are marked to avoid them being confused with sheep carcasses.
• A log book stays in the plant until it is filled; depending on how busy the plant is, the time period can be for up to two months. During the time the log book is in the plant, the operator may review entries at any time.
• Though it is not done as a matter of procedure, plant operators are requested to sign the log book entries.

Robert Connolly

Mr. Robert Connolly testified before the Tribunal. He stated that:

• He has held the position of the OSMA Liaison Officer since 1999 and he had been involved with the matters pertaining to this appeal since December 2004.
• Mr. Shaniwazi, the appellant, entered into the custom slaughter business in November 2004, prior to that time, he purchased sheep and lambs from the stockyards and was therefore exempt from having to remit license fees to the OSMA.
• The OSMA had found Mr. Shanawazi guilty of obstruction and failing to remit fees on a previous occasion on August 22, 1995.
• It is his job to prepare invoices for licence fees and mail them to processors.
• According to his notes made during the course of his contact with Mr. Shaniwazi from April 4, 2000 through April 21, 2006 (Exhibit 1 tab 6) an invoice was sent to Mr. Shaniwazi in December of 2004 indicating that he owed fees totaling $959.45 plus GST for animals custom slaughtered in November 2004. There was no response to the invoice. Further invoices were sent over the next two years.
• Mr. Shanawazi had complained to him that the OMAFRA slaughter numbers were incorrect and he had advised him to consult OMAFRA but he had not done so.
• He met with Mr. Shaniwazi on Feb 16, 2005 to discuss outstanding licence fees and Mr Shanawazi had said that he needed some time to pay the fees.
• He sent a letter to Mr. Shanawazi dated April 27, 2005 in which the outstanding license fees and finance charges were detailed. The letter proposed that the OSMA would be willing to withhold the finance interest charges on the outstanding license fees provided OHMPI made payments of $600.00/month over the next 6 months in addition to the fees incurred during those months.
• There were 115 abattoirs slaughtering sheep in Ontario. While some are occasionally in arrears for a few months (23 are behind 1 to 4 months), none are as badly in arrears as OHMPI.
• He had also spoken to Mr. Shanawazi about his failure to remit forms to the OSMA but Mr. Shanawazi said he did not have time for paperwork and laughed it off. He advised him several times that he was obliged to send back a copy of the invoice.
• Mr. Shanawazi was found at OLEX on October 4, 2005 and made partial payment of $500.00 toward outstanding license fees but has not remitted any fees since that time. He continues to slaughter sheep.
• On September 13, 2006 Mr. Shanawazi came to his office and asked for back issues of the OSMA magazine and hearing findings for the previous four years. He provided these documents – which included a finding that a different processor would lose its license to slaughter for non-payment of license fees - to Mr. Shanawazi.
• On September 13, 2006 Mr. Shanawazi reiterated that he knew he had to pay the fees but that he did not have the funds to do so.
• If sheep are purchased at a stockyard, the stockyard deducts the license fee from the seller, but if sheep are custom killed the abattoir operator must collect the license fee from the customer.
• He helped Mr. Shanawazi confirm his exemptions for sheep purchased at stockyards and credited him with the exemptions and this had reduced the money payable to the OSMA. He had never ignored Mr. Shanawazi’s requests for assistance.
• Between December, 2004 and March, 2006 he estimated he had spent 300 to 400 hours trying to get payment from OHMPI.

In response to questions from Mr. Abinajem, Mr. Connelly indicated:

• He started with the OSMA on September 22, 1999.
• The OSMA kept records for seven years. Correspondence dated November 30, 1998 had probably been destroyed.
• He understood there had been a discrepancy in slaughter figures on August 13, 1997.
• There was an issue on September 12, 2000 because OHMPI did not have purchase records from the stock yards and sale barns.
• It is easy to tell the difference between a goat and a sheep when they are alive; it is more difficult to distinguish between their carcasses. Usually goats’ tails are attached to their carcasses.
• On February 16, 2005 he told Mr. Shanawazi that he could not verify his allegations that the OMAFRA records were incorrect and advised him to verify the records with OMAFRA.
• Mr. Shanawazi had always acknowledged that he owed the OSMA money. He did make three payments of $500.00 each.
• Processors are required to mail the OSMA invoices back with the balance of exemptions deducted, confirmation of the kill and the payment.
• If the exemptions cancel out the money owed, the invoice is just a statement. If money is owed to the OSMA, it sends two copies of the invoice.
• Authorization from abattoir operators is no longer required to obtain slaughter numbers on individual plants from OMAFRA as abattoirs are operating in the public domain and are publicly licensed. When authorization forms were used, they did not require the OSMA staff to do all the calculations for abattoirs to exempt them from paying some of the fees.
• In response to a request for financial assistance, the OSMA had offered to forgo the collection of interest if OHMPI went on a regular payment schedule; it had also suggested that he raise his custom killing fee.
• Interest charges are stated at the bottom of every invoice; interest is 1.5% of the outstanding balance.
• Twenty percent of abattoirs were behind in payments to the OSMA.
• Income fluctuates in the meat industry, particularly with sheep.
• The busiest abattoirs slaughter 400 sheep per day; OHMPI was in the top 12 busiest abattoirs in the sheep business in Ontario.
• Most abattoirs pay the license fees within a month or two of slaughter. One abattoir was approximately one year behind in payments before declaring bankruptcy.

In response to questions from the Tribunal, Mr. Connelly clarified:

• Sometimes sheep purchased at a stockyard in one month are slaughtered the following month; because the OSMA bills on the basis of monthly slaughter figures, these would be counted as unclaimed exemptions.
• The invoices are blank when they are sent to the abattoirs and the operator fills in the number of head for which fees should be deducted; many abattoirs do not have any exemptions.
• He gets information from sale barns to assist sheep processors. Sale barns deduct license fees from sellers on sheep sold through their businesses and remit the fees to the OSMA.
• Abattoirs that buy from sale barns pay only for the sheep, not the licence fee.
• For persons having sheep custom killed at abattoirs, the customer pays the license fee and the custom kill charge and the abattoir submits the license fees to the OSMA.
• The fee is collected more than once on some sheep.

Summations

Mr. Abinajem apologized for not having invoices and other documents submitted in advance to the OSMA and the Tribunal. He told the Tribunal that Mr. Shanawazi is not completely literate and has difficulty with the language so it would have been difficult for him to attend the hearing. He said that while he could do business during Ramadan, it would have been stressful for him to participate in the hearing.

Mr. Abinajem explained that Mr. Shanawazi had told him that he misunderstood the process and thought his licence to slaughter would be revoked if he did not plead guilty to the charges of not remitting license fees owed to the OSMA. He submitted that the reporting requirements in the OSMA regulation are vague and it was unfair to expect OHMPI to send the invoices back to the OSMA when Mr. Connelly had said that abattoirs that do not have to remit license fees do not have to send it back. He said he did not agree that abattoirs were required to return the invoices. Mr. Abinajem argued that Mr. Connelly used OMAFRA figures to calculate the amount on the invoice and Mr. Adrian had acknowledged that OMAFRA can make mistakes. He also suggested that leaving the OMAFRA logbook in the plant for two months did not give the operators sufficient time to review OMAFRA’s figures.

Mr. Abinajem submitted that Mr. Connelly gave Mr. Shanawazi very little assistance and only prepared the invoices so that the OSMA would be able to collect the fees. He said it was not feasible for OHMPI to raise its custom slaughter fee as that would lead to a reduction in business and force Mr. Shanawazi to put some of his dependent family members out of work. He said the OSMA did not care who slaughtered sheep as long as it got its fees.

Mr. Abinajem submitted it was unfair to collect a license fee on the same sheep more than once and asked the Tribunal to order a stop to this practice. He submitted that when OHMPI had bad debts it should not be required to pay the license fee to the OSMA and he was sure that when it had bad debts it would not submit the taxes owed to government on those fees. He reminded the Tribunal that OHMPI had been required to spend $300,000.00 on their plant just to stay in business and said it had also been hurt by events such as SARS, West Nile Virus and Avian Influenza. He said that the OSMA had hurt his client with a headline on the first page of its news magazine regarding his guilty plea before the board. He said no other abattoirs were featured on the front page in similar circumstances and asked OSMA to put an apology to OHMPI on the front page of a future issue.

Mr. Abinajem asked the Tribunal to reduce the $1,000.00 penalty in recognition of the financial difficulty that OHMPI was in and asked that he have more time to pay. He argued that if OHMPI were to be put out of business its employees – largely immigrants – would be hurt and the Muslim community would suffer as there are few abattoirs who slaughter with the Halal method in Ontario.

Mr. Trudell said he did not agree with Mr. Abinajem’s characterization of the OSMA. He said that Mr. Connelly’s uncontested evidence was that the OSMA had made many attempts to assist OHMPI over the previous 18 months. He stated that the appellant had been in business since 1995 and had not provided one document or financial statement to prove the alleged financial difficulties. Mr. Trudell said that Mr. Shanawazi had admitted that he was collecting the license fees but using them for other purposes rather than submitting them to the OSMA. Mr. Trudell suggested that a $300,000.00 plant upgrade was simply the cost of doing business.

Mr. Trudell submitted that Section 4 (2) of the OSMA General Regulations stated the prescribed form, and that Mr. Connelly had testified that Mr. Shanawazi knew what the prescribed form was and that the form states on it that it is to be returned to the OSMA. He said Mr. Abinajem mis-characterized Mr. Connelly’s testimony about returning the form, as Mr. Connelly had said that if no payment was owing, only one copy of the form is sent. He argued that all the evidence was that Mr. Shanawazi knew he had to fill out these forms and he did not do so.

Mr. Trudell said that Mr. Adrian had testified that there are checks and balances in its processes to ensure that the right kill numbers are reported to the OSMA. He submitted there was no indication that Mr. Shanawazi ever approached OMAFRA to review its records and said the issue of how long the log book remains in the plant had not been raised before the day of the hearing. He agreed that there were 54 sheep unaccounted for in the March 2006 data, but said the Tribunal should not assume that any of the other figures were incorrect in the absence of any evidence to that effect. He said there had been ample time for the appellant to obtain evidence if there were any other discrepancies.

Mr. Trudell said he objected strongly to the suggestion that the OSMA had not given OHMPI any assistance. He said of 115 abattoirs, most complied with the regulations and Mr. Connelly did not spend hundreds of hours with the operators of those abattoirs. He said the double billing argument was a red herring as it did not disadvantage anyone in the marketing chain and had been in place for many years. He submitted that just because an abattoir has a few customers that do not pay it, this does not relieve it of its obligation to pay its debts and he suggested it was unacceptable that the OSMA not collect the fee in that circumstance.

Mr. Trudell said the OSMA printed a newsworthy article in its newspaper when Mr. Shanawazi pled guilty; he said anyone in the industry would want to read about it. Mr. Trudell said the OSMA was funded by the license fee and it was a big deal when it did not receive these fees for 18 months from one abattoir.

With regard to the suggested penalty, Mr. Trudell said there was a precedent with Alliston Meat Packers which had its licence to slaughter sheep revoked and was fined $5,000.00 for not remitting licence fees. He suggested that the penalty set by the OSMA in this case was more lenient and that it had bent over backwards trying to help the appellant.

Mr. Trudell asked the Tribunal to send a message to the industry that license fees must be remitted to the OSMA. He likened the situation to a case in the tobacco industry (Stetler and 934671 Ontario Limited v. Ontario Flue-Cured Tobacco Growers’ Marketing Board, Tribunal decision dated April 25, 2002. He said that this case was similar in that not remitting the license fees strikes at the heart of the issue as that is how the OSMA is funded.

Mr. Trudell asked the Tribunal to find the appellant guilty of failure to remit fees. He asked it to impose a penalty of $1,000.00 provided that all outstanding licence fees are paid within 30 days or $10,000.00 and a suspension of its license until all outstanding fees are paid if payment is not made in that time. He said the current outstanding fees to the end of August, 2006 were $10,724.52, including the adjustment worked out by the parties the morning of the hearing.

The Findings

The issues before the Tribunal are: Should the Tribunal rescind the decision of the Ontario Sheep Marketing Agency to collect license fees and finance charges over a three months period, and to fine Ontario Halal Meat Packers Inc. $1000.00, and to fine it a further $10,000, if it does not comply with the payment schedule and initial $1000.00 fine and an immediate suspension of the slaughter license for Ontario Halal Meat Packers Inc.?

The appellant in this matter admitted that the license fees were collected in the custom slaughter fee charged to customers but he does not remit the fees to the OSMA. The appellant disputed the amount of license fees calculated by the OSMA. No evidence from OHMPI’s own kill records was presented to refute the data provided to the OSMA by OMAFRA. The Tribunal finds that the data on slaughter numbers provided to the OSMA by OMAFRA is valid for the purpose of determining monthly slaughter numbers. The Tribunal examined the copies of invoices submitted into evidence by the OSMA and is satisfied that they are the forms prescribed pursuant to Section 4 (2) (e) of the OSMA General; Regulation and Section 5 (b) of Regulation 429. The Tribunal finds that the instructions for filing the invoice and disputing its record were clearly pointed out by Mr. Connelly in his testimony. Based on Mr. Adrian’s testimony, the Tribunal was confident that OMAFRA employees are able to distinguish between sheep and goats at the time of slaughter and that there is an adequate reporting system for recording the number of animals of each species slaughtered. The Tribunal rejects the argument made by Mr. Abinajem that the OMAFRA log books were not left in the plant for a reasonable amount of time for the appellant to verify the figures. The Tribunal concludes that the amount of the outstanding license fees, including taxes and financing charges that was due as of June 1, 2006 was $7,654.83 - that is the amount originally calculated by the OSMA ($8,029.65), based on OMAFRA records less $374.82 which the parties agreed was over-charged in March 2006. The Tribunal gave greater weight to the documentary evidence presented by the OSMA than the hearsay evidence presented by Mr. Abinajem.

The undisputed testimony of Mr. Connelly was that OHMPI had not submitted the reports that the OSMA requires, pursuant to regulation, to verify remittance of license fees.

Mr. Abinajem suggested that OHMPI should not be required to pay license fees when it incurs bad debts. The Tribunal notes that it is a regulatory requirement that abattoir operators who slaughter sheep in Ontario collect and remit a license fee of $1.55 per head, plus GST, to the OSMA. It is a responsibility that goes with the privilege of receiving a licence to slaughter sheep. The argument that license fees should not be required to be paid when a customer does not pay an abattoir is not reasonable. Management of outstanding accounts is a part of normal business practice. In any event there was no indication on the documentary evidence provided by Mr. Abinajem that the cheques were returned due to non-payment. Also, one cheque, dated November 6, 2004, fell outside the period of time in which the disputed license fees would have been collected.

With regard to the argument that OHMPI is in financial difficulties, the Tribunal had only the testimony of Mr. Abinajem, its accountant that this was the case. He did not submit financial records to demonstrate financial distress.

The OSMA imposed a penalty of $1,000.00 if payment of outstanding license fees, GST and finance charges was made according to the schedule and and a further $10,000.00 fine along with a suspension of OHMPI’s licence to slaughter if payment is not made according to the payment schedule. Mr. Abinajem sought a reduction of the penalty to something less than $1,000.00 and asked for more time to pay.

Given the length of time that the license fees, GST and finance charges have been outstanding (over one year) and the effort made by the OSMA to collect the outstanding monies and to make arrangements to assist the appellant in paying the monies, the Tribunal finds that the $1000.00 fine is reasonable.

The Tribunal is cognizant that license fees have remained unpaid for well over one year and is reluctant to allow OHMPI very much more time to pay.

The policy of the OSMA to charge a license fee more than once on the same head of sheep is not the subject of this appeal. The Tribunal notes that it is a feature of the marketing system administered by the OSMA and OHMPI’s first step would be to approach the OSMA if it seeks a change to that system.

The action of the OSMA in reporting the results of its hearing in its newspaper is also not the subject of this appeal.

Decision and Reasons

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

1. The appeal by OHMPI is granted to the extent that the amount of payment owing to the OSMA is reduced by $374.82.

2. OHMPI is to pay the OSMA a total of $8,654.83 ($1,000.00 in penalty and $7,654.83 in outstanding fees, taxes and financing charges as of March 31, 2006) in the following amounts by the following dates: $2,884.94 no later than November 30, 2006 $2,884.94 no later than December 30, 2006 $2,884.95 no later than January 30, 2007

3. If OHMPI fails to complete any of these payments by the dates stated, OHMPI is subject to the removal of its license to slaughter sheep.

4. No additional interest will accrue on the amounts due that relate to the time period December 2004 through March 2006 provided that payment is made in the amounts listed above by the corresponding dates listed above.

5. OHMPI is not absolved of paying license fees, taxes and financing charges related to sheep it slaughtered after March 31, 2006. Those charges were not the subject of this appeal.

The reasons for this decision are:

The collection and remittance of license fees is critical to the operation of the OSMA. The Tribunal acknowledges that the penalty must be adequate to ensure that there is compliance with the requirement to deduct and remit license fees.

Failure to comply with the payment schedule and fine in this case, warrants the penalty of removal of the license to slaughter sheep. Failure to pay the outstanding license fees and $1000.00 penalty would result in a suspension of the license to slaughter sheep in which circumstance the $10,000.00 fine would likely not be paid.