Agriculture, Food and Rural Affairs Appeal Tribunal

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

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

1, chemin Stone Ouest 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: Wm. F. Bradish & Sons Ltd. v Agricorp

Wm. F. Bradish & Sons Ltd. v Agricorp (RE) 2007 ONAFRAAT 15

STATUTE: Crop Insurance Act

HEARING: May 3, 2007

DATE OF DECISION: May 14, 2007

2007-15

NEUTRAL CITATION: 2007 ONAFRAAT 15

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

AND IN THE MATTER OF: An appeal to the Agriculture, Food and Rural Affairs Appeal Tribunal by Tom Bradish, Wm. F. Bradish & Sons Ltd., London, Ontario from a decision of Agricorp concerning the adjustment of its claim for its 2006 lima bean crop under Regulation 380/97 and the Vegetable Crops Insuring Agreement.

Before: Kirk Walstedt, Chair; Doug Flook, Member; Mary Field, Member

Appearances: Tom Bradish, Wm. F. Bradish and Sons Ltd., appellant Sher Helmer, Wm. F. Bradish and Sons Ltd., appellant Fred Thomson, Agricorp, respondent Barry Cavanagh, witness for the appellant Patrick Crinklaw, witness for the respondent Paul Koppel, witness for the respondent Arlie McFaul, witness for the respondent Melodie Zapanta, witness for the respondent

DECISION OF THE TRIBUNAL

This appeal was heard in Guelph, Ontario on Thursday, May 3, 2007. William F. Bradish and Sons Limited sought a higher payment of a claim related to its 2006 lima bean crop. Lima beans are a processing vegetable insured on an average farm yield basis.

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).

Preliminary Matters

Both parties sought to introduce late-filed documentary evidence. There were no objections and the Tribunal accepted the documents.

The Issue

The issue before the Tribunal was:

Should the calculation of the adjustment of claim on 133 acres of lima beans damaged by excessive rain be based on the yield from 305 acres of planted lima beans or the yield from 195 acres of planted lima beans?

The Evidence

Wm. F. Bradish and Sons Ltd. Case

Ms. Sher Helmer, Business Manager, Wm. F. Bradish and Sons Ltd. (“WFB”) testified that she had prepared a 2006 planting schedule for WFB and Mayfield Farms (“Mayfield”), a company owned by the son of Tom Bradish. She said the intention was that WFB plant 195 acres of lima beans and Mayfield plant 120 acres of lima beans and that two separate contracts were signed with the processor – Carriere Foods (Ontario) Inc. (“Carriere”) – one for each grower (Exhibit 4).

Ms. Helmer explained that 2006 was the first year that WFB and Mayfield had separate contracts of insurance. She said that the companies were separate entities that operate independently, but that when they had been insured together she had provided Carriere with the acreage for both companies. She said for processing vegetable crops it was normal for the processor to submit the insured acreage to Agricorp, on behalf of contracted growers.

Ms. Helmer referenced an e-mail that she had sent to Mr. Barry Cavanagh of Carriere on May 18, 2006 which she said showed the intention was to split the lima bean production between WFB and Mayfield before the crop was in the ground (Exhibit 3).

Ms. Helmer said she received the insurance sheet from Agricorp but did not notice that it showed all the lima bean acreage insured by WFB. She said she had never had a problem with the acreage reported by Carriere in the past and had since introduced a fail safe method to catch any future discrepancies.

In response to questions by Mr. Thomson, Ms. Helmer indicated:

• She prepared the 2006 planting schedule before her May 18, 2006 e-mail to Mr. Cavanagh, as it was attached to the e-mail. It would have been prepared before the contracts with Carriere were signed as the planting schedule generates the acreage numbers for the contracts.
• The contracts were dated April 12, 2006.
• The field that was in the claim position is the Shackleton Field which was grown by WFB. Only part of that field was harvested. Mayfield grew the field that was completely harvested.

In response to a question from the Tribunal, Ms. Helmer verified that all expenses for the crops produced by WFB and Mayfield are completely separate. She said that had been proven to Agricorp before the insurance coverage was split.

Mr. Barry Cavanagh told the Tribunal he was the Agricultural Manager at Carriere. He said he received Ms. Helmer’s e-mail in the Spring and the clerical error started in Carriere’s office as all of the 305 acres of lima beans were put in the WFB name. He said that the planting list that is started in his department is sent to Carriere’s administrative department and that department sends it on to Agricorp. He said he did not discover the error until Ms. Helmer brought it to his attention in the Fall, or possibly Winter, of 2006.

In response to questions from Mr. Thomson, Mr. Cavanagh indicated:

• He could not comment on which grower owned which fields but it was an error to report that no acres were assigned to Mayfield.
• He was not at the field when Agricorp’s adjuster – Patrick Crinklaw – inspected the crop for damages but he did sign the crop inspection report the same day. There were 133 acres of lima beans destroyed due to excessive rainfall.
• The process for contracting with lima bean growers was regulated by the Ontario Farm Products Marketing Commission (OFPMC) and the Ontario Vegetable Growers Association (OVGA) – Carriere selected the growers but increases and reductions in acreage had to be made pro rata over its growers. Once the growers are licensed they are obligated to grow for Carriere for three years.
• Mayfield was not a new grower in 2006.

Mr. Cavanagh clarified that he was the liaison between growers and Carriere. Mr. Cavanagh later looked at the 2006 Planting Schedule (Exhibit 4) and indicated that it showed that WFB grew the Shackleton West field.

Mr. Tom Bradish testified that WFB was not aware of anything going amiss with the crop insurance coverage for the 2006 lima bean crop until the claim was made in Fall 2006 and it then took some time to figure out exactly what had gone wrong. He said he appealed because he could not accept such a loss on 133 acres of lima beans. A schedule of input costs was filed with the Tribunal (Exhibit 5).

In response to questions from Mr. Thomson, Mr. Bradish indicated:

• Ms. Helmer looks after the business side of the farming operation of WFB as well as the payroll and other business activities related to a harvesting operation of WFB.
• Ms. Helmer has the authority to sign reports on his behalf and she signed the crop inspection report.
• In October 2006 it appeared that there would be no compensation for 133 acres of lima beans and he thought something was wrong so he did not sign off on the yield that year as quickly as usual.
• Fall was a busy time for WFB and it was toward the end of the year before he worked out what had happened.

Agricorp Case

Mr. Patrick Crinklaw told the Tribunal he had been an Adjuster with Agricorp for two and one half years and that he also farmed and had an interest in a grain elevator.

Mr. Crinklaw said he was the Adjuster who examined the WFB field which was damaged and filled out the Crop Inspection Report dated October 4, 2006 (Exhibit 1, Tab 5). He said he understood that Mr. Cavanagh had called in a damage report which was faxed to him by Agricorp. He said he was alone when he examined the field but then met Mr. Cavanagh and completed and signed the paperwork. He agreed the Report showed 305 acres of lima beans for WFB in 2006.

Mr. Crinklaw said Ms. Helmer had also signed the Crop Insurance Report and had not indicated that it should be under the Mayfield contract or that the acreage was incorrect. He indicated that Mr. Cavanagh did not note any errors in the acreage recorded on the Report either.

Mr. Crinklaw said he had completed an earlier damage report on June 22, 2006 as there had been a heavy rain immediately after planting. He said WFB had considered re-planting it but he did not believe they did re-plant. He said there was no indication at that time of any errors in the acreage reported.

In response to questions from Mr. Bradish, Mr. Crinklaw indicated:

• He agreed that WFB would not have known the acreage recorded in the insurance contract in June 2006.
• He did not recall why the lima beans were not re-planted but recalled that they did not look too bad during emergence.

In response to a question by the Tribunal, Mr. Crinklaw said the lima beans were not harvestable in the Fall because they were poor quality, turning yellow with pods on the ground and mould starting to form. He said the processor, Carriere, did not want them.

Mr. Paul Koppel said he was a Regional Manager with Agricorp and responsible for Middlesex County as well as parts of Elgin County and Lambton County. He said he had been with Agricorp since it was formed.

Mr. Koppel said he had been involved in the process of registering Mayfield as a new customer, independent of WFB, in May 2006. He said there were strict requirements to be met and that management and financial matters had to be completely separate in order to have separate crop insurance accounts.

He said he first became involved in the 2006 lima bean crop insurance dispute in January 2007 when he was informed by Melody Zapanta that there was a problem with the proof of loss being signed. He said he spoke to Ms. Helmer to see if they could resolve the problem and pay the claim and met with her and Mr. Bradish about one week later. He said he had no prior knowledge of an acreage dispute.

Mr. Koppel explained that it was not unusual for a processing representative to call in a damage report, as was done in this case. He said there were two damage reports filed in 2006 regarding these 305 acres of lima beans and both were in the name of WFB. He said Mayfield did not make any damage reports for lima beans in 2006.

Mr. Koppel said that the insured grower is ultimately responsible for ensuring that the acreage reported is correct, notwithstanding that the processor reports the acreage for processing vegetable crops. The Tribunal was referred to the Contract of Insurance (Exhibit 1, Tab 2). Mr. Koppel said Agricorp sends out a document confirming the total acreage on it to insured growers and they have 10 days to correct it (Exhibit 1, Tab 3). He said this confirmation, dated August 16, 2006, was sent to WFB in August 2006 and no corrections were made by WFB. Mr. Koppel said confirmation notices were also sent to Mayfield and it did not call in any corrections.

Referring to the Contract of Insurance, Mr. Koppel confirmed that it is the responsibility of the insured to report the final acreage and make sure the information is correct. He clarified that with processing vegetables the processor would call in the initial acreage and may report the damage. He said the contract indicated that the insured grower is deemed to have accepted the acreage confirmation report unless the insured notifies the insurer within 10 days of notification. He said Agricorp was not notified of any errors in the acreage reported until January 2007.

In response to questions from Mr. Bradish, Mr. Koppel indicated:

• He agreed that WFB and Mayfield were separate entities.
• He assumed that the two companies would report their acreage correctly.
• The Crop Insurance Contract is a resource and people can refer to it when an issue arises.
• The Acreage Confirmation report is sent to the grower so the grower can be sure it is correct.
• WFB would not have known in June 2006 the final acreage recorded by Agricorp.
• Mayfield would not be expected to file a damage report if only WFB lima beans were damaged.

Mr. Arlie McFaul testified that he was Agricorp’s Account Lead for vegetables and oversees the processing and fresh market vegetable insurance plans. He said he had worked in the processing industry and been a processing specialist and had been with Agricorp for two and one half years.

Mr. McFaul said that vegetable processors have a contract signing day where a certain amount of acres are assigned to each grower, and the processor then submits the acreage to Agricorp. He said the processor also sent a report to the OPVG after the contracts are signed. Mr. McFaul stated that Agricorp sends a spreadsheet for each vegetable crop to each processor with their established growers at the top and new growers at bottom. He said Mayfield was at the bottom of the spreadsheets for the vegetable crops it grew but not for lima beans. Mr. McFaul said that acreages are provided to Agricorp after they are planted so they know the final acreage. For the 2006 crop year the spreadsheet showed 305 acres of lima beans planted by WFB and none by Mayfield.

Mr. McFaul said he became involved in this dispute on January 29, 2007 when he was informed by e-mail by Melody Zapanta that there was a dispute regarding the acreage. He said it was unusual to have an acreage dispute at that time of year. Mr. McFaul said there were no problems reported earlier in the year with the lima bean acreage and no other instance in 2006 where Carriere forgot to report the acreage of one of its growers.

Mr. McFaul confirmed that both WFB and Mayfield grew more than one crop for Carriere. He said no problems were reported for the corn, green and waxed beans and green pea acreages. He said acreage reports were sent to growers and the WFB report showed 305 acres of lima beans. He said if this was an error it would normally be called in by the grower.

Mr. McFaul said that Agricorp had a record of a question by WFB as to how many contracts it could have for separate harvest coverage. He explained that separate harvest coverage allowed for three separate coverage periods within one contract and that there is no yield offsetting when you harvest crops at different time periods. He said that feature was not offered for lima beans but that it could be purchased for sweet corn, peas, green and waxed beans insurance contracts.

Mr. McFaul said that splitting the acreage of lima beans between two growers had the same impact as separate harvest coverage contracts and in this case if the low yield on the 133 acres not harvested were not offset by the high yield on the balance of the 305 acres planted the claim payout would be much higher.

Mr. McFaul agreed that if Carriere did report the acreage of WFB and Mayfield incorrectly then both growers had several opportunities to notify Agricorp of the error. He agreed that when the damage report was called in to Agricorp in June the call centre staff would have verified which grower is insured and how many total acres are insured for that grower.

In response to questions from Mr. Bradish, Mr.McFaul indicated:

• He interacted with the OPVG and processors more than with growers.
• His spreadsheets would be sent to processors not growers.
• With the exception of lima beans the acreage in his spreadsheets was similar to, but not exactly the same as, the acreage in Ms. Helmer’s 2006 Planting Schedule.
• With other vegetable crops WFB and Mayfield had separate harvest coverage by splitting the production between the two companies and separate harvest coverage within the crops.

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

• The OPVG was not copied on information that passed from Agricorp to processors.
• He would not have seen Ms. Helmer’s planting schedule in his communication with Carriere. It is not usual for processors to have that level of detail as Agricorp and the processor are interested in total acreage, not individual fields.
• The yield from one field offsets the yield from another field so Agricorp only tracks fields for crops with separate harvest coverage.

Ms. Melodie Zapanta told the Tribunal that she was a Production Insurance Plan Coordinator for Agricorp and part of her responsibility was to process claims. She said to do that she needed a signed proof of loss form and she had tried to obtain one from Ms. Helmer but was told that WFB was still approving the yield and they would then sign the form.

Ms. Zapanta testified that on January 29, 2007 she received an e-mail (Exhibit 6) and attached spreadsheet from Janis Bens which indicated the acreage should have been reported as 133 acres of lima beans for Mayfield and 172 acres for WFB.

In response to a question by Ms. Helmer, Ms. Zapanta said Janis Bens was with the processor, Carriere.

In response to questions from the Tribunal Ms. Zapanta clarified that Ms. Bens indicated that the total yield from WFB would not change but the acreage should be changed from 305 acres to 172 acres and that Mayfield had no yield because its 133 acres were not harvested.

Summations:

Mr. Bradish told the Tribunal that it had been a very unfortunate experience but WFB had done everything in good faith and put a lot of time and effort into the crop insurance program over the past two years. He said mistakes had been made and he was bearing the brunt of them.

Ms. Helmer submitted that no one disputed that the intention was that the 2006 lima bean crop be grown by two growers but that the processor had not reported the acreage correctly to Agricorp, and even when it tried to rectify it in January 2007 did not get the acreage correct. She said it made no sense for Mayfield to have grown a partial field. Ms. Helmer acknowledged that she had an opportunity to catch the error and missed it. She pointed out that crop insurance premiums were paid on the correct number of acres.

Mr. Bradish added that crop insurance for processing vegetables was complicated because the OPVG and the processors were involved as well as the grower and Agricorp. He said crop insurance had come a long way in the past 25 years and it was unfortunate this error was not detected.

Mr. Thomson agreed that it was not an enjoyable situation. He stated that Agricorp relies on customers and, in the case of vegetable crops, processors as well to provide it with accurate information. He said Agricorp had checks and balances and obligations to exercise due diligence to see that its crop insurance plans are run properly.

Mr. Thomson argued that in this case, both growers went through the entire growing season with no challenges as to what acreage was assigned to each grower and it was only after the fact when claims payments could be calculated that Agricorp heard that the acres were reported wrongly. He submitted that the Tribunal had heard conflicting information as to what acres were grown where and even in January 2007 there was still a disagreement between the grower and the processor as shown by the e-mail communication between Ms. Zapanta and Ms. Bens.

Mr. Thomson said it made good business sense to obtain as many crop insurance contracts as possible, as WFB had done. He submitted that the obligation was on the grower to ensure that the acreage on each contract is correct. He asked the Tribunal to find in favour of Agricorp.

In reply, Ms. Helmer asked the Tribunal to look at the growing contracts, as they had the correct acreage assigned to each grower and they had not changed.

The Findings

The Tribunal finds that it is clear from the contracts between Carriere and WFB and Carriere and Mayfield that the two growers intended to split the 2006 lima bean crop. Carriere did not report the acreage laid out in the contracts accurately to Agricorp.

The Tribunal accepts the argument of Mr. Thomson that the onus is on the grower to provide accurate information to Agricorp, and to verify that the reported acreage is correct. The Tribunal finds that WFB had the responsibility and the opportunity to correct the error in reported acreage but that this was not done. The insurer was not notified of the correct acreage until after the loss was incurred.

While the Tribunal has a great deal of sympathy for the appellant in this case, the Tribunal cannot fault Agricorp in its adjustment of the claim. WFB had a contract of insurance for 305 acres of lima beans. The Tribunal finds that Agricorp correctly adjusted the claim based on the yield from 305 acres of lima beans.

Decision and Reasons

After careful consideration of the evidence and submissions made, the Tribunal dismisses the appeal of W.F. Bradish and Sons Ltd..

The reason for this decision is that Agricorp is obligated to adjust the insurance claim on the basis of the contract that it had with WFB, not on the basis of the contract that the grower had intended to have with Agricorp.

DATED AT Guelph, Ontario this 14th day of May, 2007.