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: AFRAAT@ontario.ca
Guelph (Ontario) N1G 4Y2 Tél.: (519) 826-3433, Téléc.: (519) 826-4232 Courriel: AFRAAT@ontario.ca
AGRICULTURE, FOOD AND RURAL AFFAIRS APPEAL TRIBUNAL
APPEAL:
Sarantakos v Chicken Farmers of Ontario
Sarantakos v Chicken Farmers of Ontario 2015ONAFRAAT27
STATUTE:
Ministry of Agriculture, Food and Rural Affairs Act
HEARING:
November 27, 2015
December 31, 2015
2015-27
NEUTRAL CITATION:
2015ONAFRAAT 27
IN THE MATTER OF SECTION 16 OF THE MINISTRY OF AGRICULTURE, FOOD AND RURAL AFFAIRS ACT, R.S.O. 1990, CHAPTER M.16, AS AMENDED.
AND IN THE MATTER OF: An Appeal to the Agriculture, Food and Rural Affairs Appeal Tribunal by Paul Sarantakos, of Smithville, Ontario, from Chicken Farmers of Ontario’s (CFO) decision dated October 2, 2015 denying a request for an exemption from the service charge fee associated with the alternative method to conduct business pursuant to CFO Regulation No. 2519-2015.
Before:
Jeffrey J. Hewitt, Vice-Chair; Claire Belluz, Member; Arnold Strub, Member
Appearances:
Paul Sarantakos – Appellant
Geoff Spurr – Counsel for the respondent, Chicken Farmers of Ontario (CFO)
Murray Opstein – CFO Director, Witness
DECISION OF THE TRIBUNAL
This appeal was heard in Guelph, Ontario before the Agriculture, Food and Rural Affairs Appeal Tribunal on November 27, 2015.
Appeal Overview
In 2014, Chicken Farmers of Ontario (CFO) enacted a regulation and policy that required, effective September 30, 2014, all farmer-members, transporters and processors to provide the Board with an e-mail address for the purposes of communications and filings with the Board.
CFO’s regulation also allows a producer for any year to apply to the CFO Board for a method of communication other than email; if such alternative is approved, the Board, may direct the producer to pay a service charge of $1,768 per registered premises per annum to permit communications between the producer and the Board in a non-digital format. In this case, the Appellant sought to continue to communicate with the Board in writing and file forms and information by regular mail.
CFO declined the Appellant’s application and ordered the Appellant to provide CFO with a commercial email address by May 29, 2015. It advised that failure to comply with CFO’s order would result in his crop quota not being allotted to him commencing Quota Period A-133 and continuing thereafter until compliance was achieved.
Paul Sarantakos appealed CFO’s decision dated April 14, 2015 and CFO’s order and direction dated May 21, 2015 and requested that he be allowed to fill out his forms on paper and return his completed forms to CFO by regular mail.
In a hearing before this Tribunal on July 15, 2015, CFO advised that it would be prepared to allow Mr. Sarantakos to continue to communicate with the CFO in writing. As a result, in its decision dated July 17, 2015, the Tribunal ordered that Mr. Sarantakos be allowed to communicate with the CFO in writing.
However, Mr. Sarantakos also raised at that time and for the first time his concerns about paying the prescribed fee of $1,768, which individuals not using digital communications must pay. Because that issue was not originally raised before CFO, the Tribunal advised that the issue of the prescribed fee must first go to a hearing before CFO. CFO dealt with Mr. Sarantakos’ request for an exemption from the payment of the $1,768 fee at a hearing held on September 15, 2015, and subsequently issued a decision and order and direction dated October 2, 2015 denying his request for an exemption. It is the October 2 decision that Mr. Sarantakos now appeals to the Tribunal.
Issue before the Tribunal
The issue before the Tribunal is whether Mr. Sarantakos should have to pay the service charge required of CFO members who have been exempted from using digital communications?
To determine that issue, the Tribunal must decide (i) whether or not CFO has the authority to prescribe service charges to its members, outside of the regular per kilo licence fee, and (ii) if there are any grounds by which a member can request, and be granted, an exemption of said service charge.
Evidence
Introductory Submission by Mr. Spurr
At the request of the Tribunal, Mr. Spurr, counsel for CFO, outlined the statutory and regulatory authorities by which the CFO can impose fees on its members. He directed the Tribunal to Regulation 402 – Chicken Marketing made under the Farm Products Marketing Act. Section 4 delegates to CFO overall authority for the producing or marketing of chickens. Section 5 delegates to CFO the power to make regulations with respect to chickens for g) licencing fees and for f) providing exemptions from any or all regulations. Section 7 (4) vests CFO with the power to fix and impose service charges for the marketing of chicken.
Paul Sarantakos
Mr. Sarantakos has been a Chicken Farmer in Ontario for over thirty years. He initially received a quota from his father and the amount of quota has grown over the years to 26,000 units. In the last year, Mr. Sarantakos sold 3,000 units of quota at $120.20 per unit for over $360,000, leaving him with 23,000 units (of which the implied value is over $2,760,000).
Mr. Sarantakos freely admits that he can afford to pay the $1,768 fee that is in contention. He objects to paying it on principle. He believes that the licensing and over-production fees that he already pays to CFO (of over $6,000 and $4,700 per year respectively) should more than cover the cost of communicating with CFO and obtaining the Schedule 1 Forms he needs six times per year.
Mr. Sarantakos stands to lose about $90,000 for each quota allocation that may be withheld by CFO as a penalty for not paying the $1,768 fee. This would put his operation in jeopardy of going out of business. He believes that the penalty is out of proportion and does not make sense.
Mr. Sarantakos offered no evidence to counter the power and authority of the CFO to impose licence fees and service charges to its members.
Murray Opstein
Mr. Opstein is a Director of CFO from District 6 with over eight years of tenure on the Board. He currently sits on the Audit Committee and the Governance & Leadership Committee of CFO. He has been a chicken producer since 1991.
Mr. Opstein gave detailed evidence on the CFO Connects initiative. This initiative was set in motion to convert the system for marketing chickens in Ontario from a paper system to a paperless system. In so doing, the data would become real-time and more valuable to all stakeholders in the chicken supply chain.
The conversion cost for CFO Connects was paid for from the “Over Growing Penalties” fund, and not from licence fees, which are used expressly for the regular operation of the system.
Mr. Opstein explained that the licence fees that are charged by CFO have always been used to pay for the operation of the system. When the system was driven by paper, the fees paid for the paper system. Now that the system is driven by real-time data input at the source, any paper processing is not covered by operations, necessitating a service fee to be charged for cost recovery.
With the successful conversion of all but forty chicken producers to the new paperless system, CFO implemented a service fee of $1,768 per year to those producers who remained on the old paper system. This cost recovery fee was charged to each of those producers in order to process their data from paper into the CFO Connects paperless system. Thirty-nine producers were granted an exemption by the CFO and remain on the paperless system for religious or health reasons. However, all thirty-nine have paid the yearly $1,768 service charge fee.
Mr. Sarantakos, who was also granted an exemption by the CFO even though he did not have any of the recognized reasons for converting to the new digital system, is the only producer who has not paid the yearly service charge fee.
Findings and Analysis
Upon a review of the legislation upon which CFO was established and under which it operates, the Tribunal finds that CFO has been granted the authority to impose licence fees and service charges upon its members.
Regulation 402 under the Farm Products Marketing Act defines “local board” as Chicken Farmers of Ontario (CFO). It then sets out the powers of the local board. The provisions of Regulation 402 relevant to this appeal are as follows:
- The Commission delegates to the local board the power,
(a) to require persons engaged in producing or marketing chickens to register their names, addresses and occupations with the local board;
(b) to require persons engaged in producing or marketing chickens to furnish such information relating to the production or marketing of chickens, including the completing and filing of returns, as the local board determines;
(f) to do such acts and make such orders and issue such directions as are necessary to enforce the due observance and carrying out of the Act, the regulations and the plan.
- The Commission delegates to the local board its powers to make regulations with respect to chickens,
(f) providing for the exemption from any or all of the regulations, orders or directions under the plan of . . . any person or class of persons engaged in the producing or marketing of chickens;
(g) providing for the fixing of licence fees payable yearly, half-yearly, quarterly or monthly at different amounts or in instalments from any or all persons producing or marketing chickens and the collecting of the licence fees and the recovering of such licence fees by suit in a court of competent jurisdiction.
The Commission vests in the local board the following powers:
To fix and impose service charges from time to time for the marketing of chickens.
It is clear from reading these sections that:
CFO has the authority to require Mr. Sarantakos to provide both personal and production information to CFO [Sections 4(a) and (b)].
CFO has the authority to require Mr. Sarantakos to provide production information by digital means [Sections 4(b)].
CFO has the power to exempt Mr. Sarantakos from any regulations, orders or directions [Section 5(f)] but does not have to.
CFO can fix and impose the $1,768 service charge upon Mr. Sarantakos [Section 7(4)] in addition to his regular licence fees [Section 5(g)].
Despite not having hardship or religious reasons for an exemption from digital communication, CFO has granted Mr. Sarantakos an exemption such that he may continue to communicate with CFO by traditional paper means. However, there is no basis for Mr. Sarantakos to be exempt from paying the $1,768 service charge.
No other exempted producer or marketer has been granted an exemption from paying and the Tribunal sees no reason to treat Mr. Sarantokos differently. The Tribunal agrees with Mr. Spurr’s final submission that Mr. Sarantakos has full control of his options — he has the ability to pay the fee and the decision to pay is in his hands.
Order of the Tribunal
The appeal of Paul Sarantakos is hereby denied. He is ordered to pay any outstanding service charges required by CFO and to pay such service charges on a going forward basis if he wishes to receive future quota.
Dated at Tecumseh, Ontario this 31st day of December, 2015