Ferme Siclo v. Canada (Minister of Agriculture and Agri-Food), 2004 FC 871

Date: 20040618

Docket: P-4-01

Citation: 2004 FC 871

Ottawa, Ontario, the 18th day of June 2004

PRESENT: THE HONOURABLE MR. JUSTICE BLANCHARD, Deputy Assessor

BETWEEN:

                                                                 FERME SICLO

                                                                                                                                            Appellant

                                                                           and

                             THE MINISTER OF AGRICULTURE AND AGRI-FOOD

                                                                                                                                        Respondent

                                    REASONS FOR JUDGMENT AND JUDGMENT

INTRODUCTION

[1]        These are two appeals filed by Ferme Siclo (the appellant) with the Assessor against compensation awarded by the respondent Minister of Agriculture and Agri-Food (the Minister) for the destruction of ovines (sheep) and caprines (goats) suffering from a disease known as "scrapie" (the disease). A direction to join both appeals in a single case was made by Chief Justice Lutfy on December 18, 2001. The hearing was held before me, as Deputy Assessor, on January 12, 2004, regarding the insufficiency of the compensation awarded under section 56 of the Animal Health Act, S.C. 1990, c. 21 (the Act).

FACTS

[2]        The appellant is a family business owned by Serge Sigouin and Clodine Côté. The owners of this farm are farm producers and raise ovines and caprines.

[3]        The Department is responsible for applying the Act and the Regulations made under the Act, in particular the Compensation for Destroyed Animals Regulations, SOR/2000-233 (the Regulations).

[4]        An initial cull was made on December 21, 2000, and is not at issue in this appeal. Peter Conway, an ovine producer with 20 years' experience, was retained by the respondent to appraise the appellant's flock. The respondent's appraiser estimated the total value of the flock at $199,200 (about $550 a head), which was subsequently awarded to the appellant to compensate it for the destruction of 468 sheep and two goats. The appellant was satisfied with the compensation awarded.

[5]        In February 2001, the appellant bought a new flock of sheep from Jean-Luc Dupras. Mr. Dupras' father had died and as he did not want to continue the farm operation, he undertook to sell the flock quickly on behalf of his father's estate. In the appellant's submission, this flock was purchased for a very good price and one not related to the market value of the flock. The flock purchased came from the Romanoff and Dorsett breeds, and according to the appellant met all the requirements of an ovine producer, both in the general quality of the flock and the ease of deseasonalized breeding of the flock.

[6]        On two occasions the Minister ordered the slaughter pursuant to the Act of the appellant's ovines which were contaminated or suspected of being affected by the disease.

First slaughter: September 20, 2001

[7]        Dr. Denis Bouvier, a veterinarian and inspector for the Canada Food Inspection Agency (the Agency), acting for the Minister in accordance with section 48 of the Act, ordered the slaughter of 11 ovines he suspected of suffering from the disease.

[8]        On September 19, 2001, Dr. Bouvier proceeded to appraise the market value of the 11 ovines. Subsection 51(1) of the Act provides that the Minister may order compensation to be paid to the owner of an animal destroyed under the Act. That compensation shall be "the market value, as determined by the Minister, that the animal would have had at the time of the evaluation".

[9]        The respondent maintained that in order to determine the market value of the appellant's flock Dr. Bouvier did considerable research in the market and checked the value of similar animals slaughtered in other districts. In his appraisal he determined that the market value of the 11 animals slaughtered varied between $100 and $400 a head.

[10]      He appraised three of the 11 animals at a market value of $100, based on the fact that they were intended for auction, specifically "Encans de la Ferme (1984) Inc.". The amount was obtained by calculating the average amount obtained by the appellant in the past for similar animals at the same auction.

[11]      By a notice titled [TRANSLATION] "Requirement to Dispose and Award of Compensation" dated September 20, 2001, the appellant was informed that the 11 ovines suspected of suffering from the disease were to be slaughtered before October 1, 2001, pursuant to subsection 48(1) of the Act and that the market value of those ovines, payable to the appellant, was $2,750.

[12]      By a letter to the Federal Court dated October 25, 2001, the appellant expressed his dissatisfaction and filed an appeal from the Minister's decision based on the inadequacy of the compensation. Chief Justice Lutfy, acting as Assessor, ordered that this letter be treated as a notice of appeal pursuant to section 56 of the Act.

Second slaughter: November 8, 2001

[13]      A second notice, titled "Requirement to Dispose and Award of Compensation", dated November 2, 2001, informed the appellant that the remainder of the ovines in the herd suspected of suffering from the disease were to be slaughtered before November 15, 2001, pursuant to subsection 48(1) of the Act.

[14]      On November 8, 2001, 502 ovines and 22 caprines were destroyed pursuant to section 51 of the Act.

[15]      The Minister asked Alain Juneau to appraise the animals, while for its part the appellant obtained the services of Mathieu Forand. Drs. Hurtubise and Allard, veterinary inspectors for the Agency, were also present during the appraisal.

[16]      The circumstances of the appraisal were such that the two appraisers arrived at different market values and were unable to reach a consensus. According to the testimony of Mr. Sigouin, Mr. Forand decided to leave the premises in view of Mr. Juneau's intransigent attitude. Mr. Sigouin testified that this was when Mr. Hurtubise intervened and required Mr. Forand to give prices by group of animals on a document which was quickly drawn up. Mr. Forand disagreed with this approach and with the prices entered on the document in question, though his signature appears on it. Mr. Forand refused to testify in Court about the circumstances of the appraisal.

[17]      The prices set by the two appraisers are contained in the report by the inspector dated January 17, 2002. Those prices were set in the following categories: adults, to the price of which a gestation factor was added, animals born in 2000, male and female lambs over a month old and lambs under a month.

[18]      The following table reflects the prices set by the two appraisers for the various categories.

TABLE - MARKET VALUE OF DISEASED ANIMALS

[19]      Following the appraisal, the Minister, pursuant to section 51 of the Act, paid compensation which he felt corresponded to the market value determined by their appraiser, Alain Juneau. By a notice dated November 2, 2000, the Minister offered the appellant compensation of $160,350 for 502 ovines and 22 caprines that were to be destroyed.

[20]      Once again, the appellant appealed the Minister's decision as being insufficient compensation, by a second letter to the Federal Court dated November 6, 2001.

POINT AT ISSUE

[21]      The point at issue is the following:

Was the compensation awarded to the appellant by the Minister for the slaughters on September 20, 2001 and November 8, 2001, equal to the market value of the animals in question, and was it reasonable?

LEGISLATION - ANIMAL HEALTH ACT

[22]      Section 48 of the Animal Health Act authorizes the Minister to order the destruction of animals which are, or are suspected of being, affected or contaminated by a disease. Under section 51, when the owner's animals are destroyed the Minister may order compensation to be paid to the owner. At the same time, under subsection 51(2), the compensation payable to the owner must correspond to the market value of the animal minus the value of its carcass, as determined by the Minister, at the time of the appraisal if its destruction was not ordered. Section 48 provides:

[23]      Section 51 provides:

[24]      Additionally, section 2 of the Compensation for Destroyed Animals Regulations sets a ceiling for compensation paid by the Minister at $600 for ovines. Section 2 provides:

APPELLANT'S POSITION

[25]      The appellant was not satisfied with the compensation paid by the Minister for the two slaughters that took place and felt that the amount did not reflect the market value.

[26]      The appellant was satisfied with the amount received for the cull in December 2000. At that time the compensation was $550 for pregnant ewes and $400 for non-pregnant ewes. The appellant argued that the amount awarded was more reasonable than that awarded for the two subsequent slaughters. The appellant contended that it was unfair, ten months later, at the time of the slaughter of October 25, 2001, for the pregnant ewes to be appraised at $400 and the non-pregnant ewes to be appraised at between $100 and $400. The appellant was also dissatisfied with the compensation paid by the Minister following the second disputed slaughter, carried out on November 8, 2001.

[27]      The appellant does not accept the appraisal documented by the two appraisers. In its submission, even Mr. Forand's appraisal, despite the fact that it was more favourable than that done by Mr. Juneau, was unacceptable since it was prepared in haste at the insistence of Dr. Hurtubise. According to Mr. Sigouin, Mr. Forand was dissatisfied with the circumstances of the appraisal and disagreed with Mr. Juneau's appraisal and the prices which he had to prepare at Dr. Hurtubise's insistence.

[28]      The appellant submits that, in preparing his appraisal, Mr. Juneau failed to consider several relevant factors. He refused to consider the appraisal criteria suggested by Mr. Forand; he did not take the age of the animals into account; he did not take into account the type of sheep; he did not take the type of rearing into account; he did not take the actual pregnancy of the ewes into account; he refused to examine the flock register in detail.

[29]      Additionally, the appellant argues that Mr. Juneau is not an ovine producer; he has limited knowledge of the production of ovines; he could not readily indicate the criteria he was using for his appraisal; he admitted that the maximum allowed in the Compensation Regulations was $600 a head and nevertheless admitted that he had never awarded more than $360 a head for a ewe; he appraised ewes at $310 a head and added $50 for pregnancy, making a total of $360 a head on October 31, 2001; he could not explain the difference in value with the appraisal conducted by Peter Conway in 2000; he mentioned several times that he had not been impressed by the flock's body condition at the appraisal of October 31, 2001, although he was not familiar with the flock's body condition; he admitted it was natural for the animals' body condition to have dropped off, as in view of the cull, the flock was only being fed with hay.

[30]      The appellant maintains there was no basis for awarding it less money for his flock in 2001 than in 2000, especially as, it argued, the 2001 flock was of better quality than that of 2000.

RESPONDENT'S POSITION

[31]      Regarding the first slaughter that took place on September 20, 2001, the respondent states that the compensation awarded to the appellant for its 11 animals is equal to the market value.

[32]       The respondent maintains that the appraiser Dr. Bouvier has an excellent reputation in appraising ovines and his services have been used by the Minister many times. The appraiser took all reasonable steps to determine the market value of the animals. He made several checks in the market and compared the value of similar animals in other districts. Dr. Bouvier took into account the fact that the appellant intended to send three animals to auction and the average price obtained at the auction in question in prior years. In the respondent's submission, Dr. Bouvier's appraisal was reasonable and should be accepted.

[33]      For the second slaughter on November 8, 2001, Mr. Juneau was the appraiser for the Minister and Mr. Forand for the appellant.

[34]      As the two appraisers were unable to agree on the market value, the Minister submits he was justified in accepting the appraisal of his appraiser, namely a market value of $160,350 for 502 ovines and 22 caprines.

[35]      It should be noted that after the compensation was paid to the appellant, the Minister found there had been a calculation error of approximately $14,000 in the appellant's favour. The Minister did not require that this amount be repaid by the appellant.

[36]      The Minister also states that he obtained the invoices for the purchase of the flock in February 2001 and that the appellant paid $52,000 for its flock, which is an amount much less than that awarded by the Minister.

[37]      Accordingly, the respondent alleges that the sum of $163,100 paid to the appellant after the two culls represented the market value of the animals and the amount was entirely reasonable.

[38]      The respondent submits that the market value should be based on reliable data taken, inter alia, from comparable sales, current transactions by bidding or auctions. At the hearing, the respondent's expert witnesses also testified that in their opinion the market value is determined in accordance with certain factors that include breed, genetic merit, sex and state of pregnancy.

[39]      Further, according to Drs. Hurtubise and Bouvier, the witnesses for the respondent, the appellant's flock register was in the form of a large card posted on a door. The information was incomplete: it was impossible to determine the breeding periods, the lambings since the herd was purchased in February 2001 or even the relationships between the lambs and their mothers.

[40]      Further, the two aforesaid witnesses were involved in the cull in 2000, had an opportunity to look at the flock in 2000 and could see that the quality of the flock register was much better than that in 2001.

[41]      The respondent submits that the weight of the evidence was that in 2001 the appellant offered a deficient flock register, and this explained the market values assigned to its animals. It was impossible to determine which ewes were pregnant or the state of pregnancy of possibly pregnant ewes and make any connection between the lambs and their mothers.

[42]      Further, Mr. Juneau, the appraiser for the respondent and expert witness at the hearing, was able to describe his qualifications and submitted that he had worked in the ovine field for many years, including being a market value appraiser.

[43]      Mr. Juneau testified that the body condition of the flock was well below average and that the flesh left much to be desired. He also testified that he had not seen a flock with such a deficient register. All the animals were mixed up and were not grouped by stage of pregnancy, with the non-pregnant animals separate.

[44]      As to the register, which was a piece of cardboard tacked to a door, Mr. Juneau admitted he was unable to take the information into account as there was nothing relevant entered on it that could help him in determining the market value.

[45]      Further, Dr. Bouvier definitely stated that the 2000 animals were in better condition, fatter and stronger than the 2001 animals. Also, the 2000 flock was different as there were several purebreds, and no purebreds were identified in the 2001 flock.

[46]      As regards the stage of pregnancy, the respondent submits that the appellant was not able to indicate which animals were pregnant and how long they had been so. Accordingly, as the appraisal was held on October 31, 2001, that is in the middle of the natural breeding period, Mr. Juneau prepared an average calculation in which he estimated that 50% of the ewes had been pregnant for 75 days, 30% had been pregnant for 45 days and 20% pregnant for 15 days. An average amount of $50 was accordingly awarded. The respondent argues that this method was reasonable, in view of the fact that the appellant was unable to establish the stage of pregnancy.

[47]      Finally, the respondent maintains that the appellant submitted no register of births that would have enabled the respondent to assess whether the ewes deserved a higher market value.

[48]      As regards genetic merit, Mr. Juneau explained at the hearing that if he was not given any paper or registration showing that the animals were purebreds he could not award them a higher market value. There was no written documentation to support Mr. Sigouin's allegations that there were purebred ovines in his flock.

[49]      Further, the testimony of Mari-Ève Tremblay, an agro-economist with the Fédération des producteurs d'agneaux et de moutons du Québec, explained that without registration an [TRANSLATION] "alleged" purebred simply is not regarded as a genuine purebred: it is treated as a crossbreed.

[50]      According to the respondent, the only documentation submitted by the appellant was an extract from the Canadian Livestock Records Corporation, which indicates which purebreds belonging to Luc Dupras were registered with the said Corporation. The appellant maintains that the breeding ewes in its 2001 flock were purebreds which had belonged to Luc Dupras. At the same time, according to the testimony of Mari-Ève Tremblay, no descendants of those animals was registered with the Corporation. Accordingly, no evidence was presented regarding the nature and quality of such descendants.

[51]      On the stage of pregnancy at the time of the appraisal, the respondent submits that if ewes were in their final stage of pregnancy obvious signs could have been detected in the first 120 days before the appraisal. Mr. Juneau testified he had not seen any lambing ewes or ewes that were about to lamb.

[52]      The respondent submitted that the appellant did not discharge its burden of establishing that the market values in question were unreasonable.

ANALYSIS

[53]      Section 56 of the Act gives the appellant the right to appeal the amount awarded by the Minister to an Assessor. The section provides that appeals are limited to questions of the inadequacy of the compensation or justification of the failure to award compensation:

[54]         On the inadequacy of the compensation, we must rely on the test of what is reasonable. In Évaluateur dans Ferme Avicole Héva Inc. v. Canada (Minister of Agriculture), [1998] F.C.J. No. 1021, Tremblay-Lamer J., paragraph 9, indicated:

On the question of the amount of the compensation, the courts have interpreted section 56 on the basis of the English version of the section, in which the test is what is "reasonable".

[55]      Strayer J., also cited by Tremblay-Lamer J. in Ferme Avicole Héva Inc., supra, confirmed the reasonableness test in Nelson v. Canada (Minister of Agriculture), [1991] F.C.J. No. 1003:

The appeal is in effect a trial of the issue of whether the compensation ordered by the Minister was "unreasonable", presumably having regard to the criteria laid down for the Minister whereby he is to determine what in his opinion is the market value that the animal ... would have had immediately before it was destroyed under this Act . . .

[56]      Essentially, the appellant maintains that its flock culled in 2001 was of a higher or equivalent quality to the flock it had in 2000. Consequently, it was unfair and unreasonable for the Minister to pay a lower compensation for the flock destroyed in 2001 than the compensation paid in 2000.

[57]      The evidence does not allow the Court to conclude that the 2001 flock was of a higher or equivalent quality to the flock culled in 2000. The evidence was that in 2000 the register made it possible to identify animals, either by tattoos in the ears or by birth labels. In 2001 the register caused problems as the animals could not be clearly identified. As Dr. Bouvier explained in his testimony, the information that was on the appellant's register was incomplete and it was impossible to determine the breeding periods, lambings since purchase of the 2001 flock or even relationships between the lambs and their mothers. I also agree with the respondent's arguments that the weight of the evidence was that in 2001 the appellant submitted a deficient flock register, which would partly justify the market values assigned to its animals.

[58]      As regards genetic merit, there was no certificate of registration or any documentation to establish the flock's genetic merit in 2001. Further, no descendant of the animals belonging to Luc Dupras and which were purchased by the appellant was registered with the Canadian Livestock Records Corporation. In my opinion, Mr. Juneau was justified in not awarding a higher amount in his appraisal for the genetic merit of the 2001 flock.

[59]      To calculate the amount awarded for pregnancy, Mr. Juneau mentioned an amount accepted by ovine appraisers in Quebec, namely $1 a day of pregnancy, to a maximum of $150, as the pregnancy of an ovine is approximately 150 days maximum. As the appraisal was held on October 31, 2001, in the middle of the natural breeding period, Mr. Juneau prepared an average calculation described in greater detail at paragraph 43 of these reasons. The result was an amount set at $50 for the pregnancy factor. Accordingly, he set the market values of pregnant ewes at $360 and non-pregnant ewes at $310. No evidence was submitted to rebut that calculation. In my opinion, this methodology seems acceptable and in the absence of evidence to the contrary I conclude that the resulting calculation was reasonable.

[60]      Mr. Juneau further testified that the condition of the flock in 2001 was well below the average and that the flesh condition was poor. Dr. Bouvier definitely stated that the 2000 animals were in better condition, fatter and stronger than the 2001 animals. The appellant submits that at the time it learned that the animals were going to be slaughtered, it was feeding them only with hay, which in its submission was the result of their flesh being below average. The appellant argues that this fact was not considered by Mr. Juneau in his appraisal. This argument cannot carry any weight. Under subsection 51(2) of the Act, the compensation payable to the owner is based on the animal's market value at the time of the appraisal.

[61]      Mr. Juneau has worked in the ovine field for many years, including being an appraiser of market value. He was able to describe the criteria which he used in making his appraisal. I am satisfied that his appraisal was done properly, I accept his expertise and I adopt his opinion on the market value of the flock which was the subject of this dispute. There was no other expert evidence to counteract the opinion given by Mr. Juneau. I recognize that Mr. Sigouin testified honestly about the circumstances of the appraisal and made his concerns known. At the same time, I did not hear his appraiser, Mr. Forand. The latter was not present to testify. I see nothing in the evidence that would allow me to conclude that the appraisal by Mr. Juneau was unreasonable.

CONCLUSION

[62]      Based on the evidence as a whole, I conclude that the appraisal of the appellant's flock, culled in 2001, done by Mr. Juneau, on which the Minister based his decision about the amount of compensation payable to the appellant, was not unreasonable. In my opinion that appraisal represented the market value of the ovines and caprines destroyed in the cull. The appellant did not discharge its burden of showing that the market values at issue were unreasonable. The appeal is accordingly dismissed.

JUDGMENT

The appeals filed by Ferme Siclo to the Assessor from the compensation awarded by the Minister of Agriculture and Agri-Food for the destruction of ovines (sheep) and caprines (goats) suffering from a disease known as "scrapie" are dismissed.

Certified true translation

Suzanne M. Gauthier, C Tr, LLL

                                                      SOLICITORS OF RECORD

DOCKET:                                                                   P-4-01

STYLE OF CAUSE:                                                   Ferme Siclo v. The Minister of Agriculture and Agri-Food

PLACE OF HEARING:                                             Montréal, Quebec

DATE OF HEARING:                                               January 12, 2004

REASONS [FOR ORDER OR JUDGMENT]:                     Blanchard J.

DATED:                                                                      June 18, 2004

APPEARANCES:

Paul Claude Bérubé                                                       FOR THE APPELLANT

Patricia Gravel                                                               FOR THE RESPONDENT

SOLICITORS OF RECORD:

Paul Claude Bérubé                                                       FOR THE APPELLANT

225-145, boul. St-Joseph

Saint-Jean-sur-Richelieu, Que. J3B 1W5

Morris Rosenberg                                                          FOR THE RESPONDENT

Deputy Attorney General of Canada

Montréal, Que. H2Z 1X4