Willow Hollow Game Ranch Ltd. v. Canada (Agriculture and Agri-Food)

Willow Hollow Game Ranch Ltd. v. Canada (Agriculture and Agri-Food)
Court (s) Database
Federal Court Decisions
Date
2016-03-22
Neutral citation
2016 FC 343
File numbers
P-2-14
Decision Content
Date: 20160322
Docket: P-2-14
Citation: 2016 FC 343
AN APPEAL TO THE ASSESSOR
PURSUANT TO THE HEALTH OF ANIMALS ACT
Ottawa, Ontario, March 22, 2016
PRESENT: The Honourable Mr. Justice Russell, Deputy Assessor
BETWEEN:
WILLOW HOLLOW GAME RANCH LTD.
Appellant
and
THE MINISTER OF AGRICULTURE
AND AGRI-FOOD CANADA
Respondent
I. THE APPEAL.. 2
II. INTRODUCTION.. 3
III. ROLE OF THE COURT. 5
IV. BACKGROUND.. 6
A. Overview.. 6
B. The Facts. 7
V. DECISION UNDER APPEAL.. 10
VI. LEGAL FRAMEWORK.. 12
A. The Legislation. 12
B. The Common Procedures Manual 18
VII. THE ISSUE.. 24
VIII. MR. WEHRKAMP’S ROLE.. 24
IX. ARGUMENTS. 26
A. Appellant 26
B. Respondent 29
X. EVIDENCE.. 31
A. Appellant’s Witnesses. 31
Mr. Randy Wehrkamp – Highlights. 31
(a) General 31
(b) The Elk Industry in Saskatchewan. 31
(c) The Nature of the Appellant’s Elk Business. 33
(d) The Evaluation Process. 38
(e) Problems with the CFIA Evaluation. 42
Mr. Blaine Weber – Highlights. 59
(a) Background and Experience. 59
(b) Market Information. 60
Mr. Terry Moorman – Highlights. 65
(a) Experience. 65
(b) Depopulation. 66
(c) Age and Value. 69
B. Respondent’s Witnesses. 70
Dr. Graham’s Evidence – Highlights. 70
(a) Background and Experience. 70
(b) The WHGR Evaluation. 71
Dr. Bischop’s Evidence – Highlights. 121
(a) Background and Experience. 121
(b) The WHGR Evaluation. 123
XI. ANALYSIS. 134
XII. EVALUATION.. 178
XIII. COSTS. 179
Schedule “A”. 189
JUDGMENT AND REASONS
I. THE APPEAL [1] This is an appeal by Willow Hollow Game Ranch Ltd. [Appellant or WHGR], pursuant to s 56(1) of the Health of Animals Act, SC 1990, c 21 [Act], of the level of compensation awarded in accordance with the valuation appraisal of the Canadian Food Inspection Agency [CFIA] of May 2, 2014, for the destruction of 266 of the Appellant’s bull elk.
II. INTRODUCTION [2] The evidence before me in this appeal reveals that the fallout from chronic wasting disease [CWD] can be both economically and emotionally devastating for a producer. The rebuilding of an elk herd following depopulation cannot be done quickly, and may require years of hard work and significant reserves of intelligence, experience and mental and physical tenacity.
[3] In order to assist with the rebuilding process, the government of Canada has provided a compensation scheme under the Act, but this scheme is not fully comprehensive and it often comes nowhere near to covering the full losses that occur when CWD strikes. The compensation scheme under the Act is limited to the market value that the destroyed animal would have had at the time of its evaluation by the Minister if it had not been required to be destroyed, minus the value of its carcass. And even this amount is subject to maximums established under the regulations for the particular kind of animal that has been destroyed.
[4] A compensation scheme for destroyed animals is socially justifiable because when an animal is found to have CWD, the whole proximate herd is destroyed even though, as occurred in the present case, it is subsequently found that only a few animals had actually contracted the disease. The evidence before me is that this obliterative approach to controlling CWD (one that is extremely costly to the producer involved) has had little impact upon the general incidence of the disease in Saskatchewan. So producers are shouldering a general burden that often arises through no fault of their own. Hence, some form of compensation is justifiable.
[5] But there are many calls upon the public purse, so that Parliament has decided that compensation under the Act must be limited in the ways set out above.
[6] The evidence before me is that, generally speaking, both producers and CFIA understand the inherent limitations of the system and usually work towards an acceptable, though inevitably inadequate, compromise. In the present case, the economic impact of CWD upon the Appellant has been so huge that, given the limited nature of the compensation available, the Appellant naturally wishes to ensure that it receives the maximum to which it is entitled. On the other side, those fixed with assessing the compensation – no matter how sympathetic they may be with the plight of the producer – must adhere to the legislative scheme and remain faithful to the public trust that is reposed in them. The elk market is fairly new in Saskatchewan, has undergone a significant recent evolution, and has singular features that make it far from easy to determine a market value for animals that are destroyed. Both sides in this dispute have very different views on what is required to identify what is reasonable and fair in the particular circumstances of this case. Inevitably, then, tensions have arisen, and these have led to some ad hominem criticism of the chair of the compensation committee, Dr. Greg Graham. He is accused of lacking the qualifications for the task at hand and of being myopic when it comes to the factors that determine the value of elk in today’s evolving market. In my view, the evidence shows that personal attacks upon Dr. Graham are unwarranted. The tensions that have arisen in this case are a function of the significant financial losses suffered by the Appellant as a result of the depopulation of its elk herd, the limited assistance available to it under the statutory scheme, the particular valuation difficulties that arose in this case, and the unique features of an evolving elk market that make it very difficult to determine a fair market value for elk that have been destroyed under the Act.
III. ROLE OF THE COURT [7] The Court’s role as an Assessor in handling compensation appeals under the Act is not, in my view, an entirely happy one. The only recourse for producers who are not satisfied with compensation decisions under the Act is to appeal to the Federal Court as an Assessor in accordance with the Act. The Court’s decision is final.
[8] The Court is well versed in the principles that govern judicial review of the decisions of boards and tribunals. But an appeal of compensation under the Act is not an exercise in judicial review. It is, in effect, a de novo trial of the issue of whether the compensation awarded by the Minister under the Act was reasonable. See Ferme Siclo v Canada (Agriculture and Agri-Food), 2004 FC 871 at para 55 [Siclo]. The Court has no expertise in the elk market and yet, in this case, is being called upon to identify, and possibly apply, the principles that should determine a reasonable market value for destroyed elk in a context where the market itself is fairly new and still evolving, and where a consensus on principle, at least on the evidence before me, has yet to emerge. The Court would normally be assisted in this task by expert testimony, but in the context of an appeal process that has no pre-trial discovery and is intended to give producers a fairly informal and timely way of questioning compensation decisions, experts are unlikely to be called, and none were called in this case.
[9] This kind of decision, in my view, should be made by those knowledgeable in the industry whose decisions could be made subject to judicial review if necessary. Experts were used by both CFIA and the Appellant as part of the compensation process but, as I will discuss later, they used different valuation principles, so no consensus is detectable. Both sides agree, however, that the evaluation process was difficult in this case.
[10] Notwithstanding these problems, I highly commend both sides for the respectful and conscientious manner in which they conducted the hearing before me in Battleford. All involved, including the Court, are doing their best to render workable what is, in my view, a flawed and fraught compensation and appeal process.
IV. BACKGROUND [11] I detect no disagreement between the parties as to the general background to this dispute. It is accurately summarized by the Respondent in written submissions which I set out below.
A. Overview [12] The Appellant owns and operates a game ranch near Turtleford, Saskatchewan. The Appellant’s operation includes meat and velvet production, hunting and breeding of elk (a member of the family Cervidae). Cervids are bred to produce males for the purpose of meat and velvet production as well as for hunts to hunters who will pay a fee in exchange for a hunting experience in natural surroundings.
[13] On February 3, 2014, a preliminary positive result of CWD was confirmed by the National Laboratory in Ottawa, Ontario of one of the Appellant’s elk – a 7-year-old male. The Minister of Agriculture and Agri-Food Canada issued a Destruction Order to depopulate all of the Appellant’s bull elk. The Minister paid compensation to the Appellant for the destruction of these elk, and the Appellant has appealed the assessment.
B. The Facts [14] On February 3, 2014 it was confirmed that one of the Appellant’s elk, a 7-year-old male, tested positive for CWD, a transmissible spongiform encephalopathy that causes a progressive neurological disease in elk and other Cervidae. CWD is generally believed to be caused by abnormal proteins called prions that will affect the animal’s central nervous system. It is highly contagious and inevitably fatal.
[15] CWD is a reportable disease under s 5 of the Act and s 2 of the Reportable Diseases Regulations, SOR/91-2.
[16] On February 3, 2014 and February 5, 2014, Notices of Quarantine (for separate pastures) were issued by CFIA to the Appellant pursuant to s 6 of the Health of Animals Regulations, CRC, c 296 that placed all cervids connected to the Appellant’s premises under quarantine.
[17] On February 5, 2014 and March 20, 2014, CFIA issued Notices of Requirement to Dispose to the Appellant, pursuant to s 48(1) of the Act, stating that destruction would occur by May 31, 2014. By March 27, 2014, the 266 bull elk identified by CFIA for depopulation were euthanized, culled, or had died of CWD.
[18] On February 3, 2014 and March 14, 2014, Declarations of Infected Place were issued by CFIA pursuant to s 22 of the Act for the identified premises of the Appellant based on the suspicion of CWD.
[19] The Minister engaged the Appellant for the purposes of valuing its animals in respect of compensation to be ordered under the Compensation for Destroyed Animals Regulations, SOR/2000-233 [Compensation for Destroyed Animals Regulations].
[20] An evaluation team approach was used which included: Dr. Graham, the Chairperson on behalf of CFIA; Mr. Randy Wehrkamp, an industry evaluator proposed by the Appellant; and Dr. Clarence Bischop, an evaluator proposed by CFIA.
[21] On March 5, 2014, a Compensation Meeting was held at Mervin, Saskatchewan with the Appellant (represented by its business partners, Mr. Bentley Brown and Mr. Keith Conacher), Dr. Graham, Dr. Bischop and Mr. Wehrkamp in attendance. Dr. Graham was the CFIA Chairperson for the evaluation with the appropriate delegated authority. General matters of valuation were discussed and it was determined that Dr. Bischop and Mr. Wehrkamp would each formulate their own report on the valuation of the Appellant’s depopulated elk.
[22] At the Compensation Meeting, the parameters of compensation were reviewed and there was a discussion related to the determination of “market value” and the importance of bills of sales, receipts and relevant pedigree and production records such that a determination on the profile of the herd and their appropriate values could be made. Mr. Wehrkamp provided a preliminary hand-written presentation at the Compensation Meeting to the Chair, Dr. Graham and Dr. Bischop for their review.
[23] Antlers are the basis for the industry scoring system by which the value of male elk can be assessed (the Safari Club International scoring system known as “SCI”). The bull elk in this case had not yet fully grown their antlers for the 2014 season; antlers will generally grow in fully by autumn. Without the antlers to score and with little supporting documentation respecting the value of the animals, valuation can be difficult, and was in this case.
[24] By March 27, 2014, the Minister depopulated the Appellant’s bull elk. During the depopulation of the Appellant’s elk, accurate inventories were established, confirming the ages and the numbers of animals that had been identified for depopulation.
[25] Mr. Wehrkamp completed his final report and submitted it to Dr. Graham for consideration on or about March 10, 2014. The Appellant provided one receipt relevant to one of the bull elk depopulated (SNOR 901W) and declined to provide receipts, invoices or other information in relation to the Appellant’s depopulated animals as requested by Dr. Graham. The explanation given for this was that purchase receipts were irrelevant because most of the animals to be valued had been acquired under a “block-purchase” arrangement and receipts did not indicate the acquisition cost of the animals to be valued for compensation purposes. Dr. Bischop completed and submitted his report on or about March 26, 2014 to Dr. Graham for consideration. On May 2, 2014, Dr. Graham completed his Report of Valuation for the Appellant’s elk.
[26] On May 2, 2014, in accordance with the Valuation Report completed by Dr. Graham, and in accordance with the true inventory numbers, the Minister issued Notices of Award of Compensation to the Appellant for their bull elk. The Minister also issued Notices of Award of Compensation to the owners of two bull elk that were in close proximity to the Appellant’s animals and therefore included in the depopulation.
[27] The Appellant was awarded compensation of $476,343.00 for the depopulation of its bull elk herd. Testing of the animals following depopulation resulted in a total of 5 positive results for CWD.
[28] The Appellant filed a Notice of Appeal on or about July 7, 2014 pursuant to s 56 of the Act stating that they wished to appeal the compensation of their bull elk.
V. DECISION UNDER APPEAL [29] The award of compensation for the Appellant’s destroyed bulk elk made by the Minister was based upon Dr. Graham’s Valuation Report of May 2, 2014.
[30] The explanatory section of Dr. Graham’s Valuation Report reads as follows:
Attended the premise of Bentley Brown of Mervin, Saskatchewan on March 5/14 to meet with Bentley and his business partner Keith Connacher (Willow Hollow Game Farms) to chair a CWD compensation meeting with their Industry representative Randy Wehrkamp of Tisdale, Saskatchewan and Dr. Clarence Bischop representing the Canadian Food Inspection Agency.
The parameters of compensation were reviewed and discussed. Bills of sale and receipts were deemed very important (hunt, slaughter, velvet and breeding sales) to determine the herd profile components and their appropriate values.
Willow Hollow Game Farms elk herd consists of a meat, velvet and a hunt component. The herd started in 2009 with the purchase of females and males from at least ten producers. WHGF has provided no purchase receipts during this entire compensation process but did indicate they were purchased at meat prices. Above average/superior genetics would have reflected higher prices upon purchase. The hunt component of the operation averaged 31 hunts per year the past five years. There is no proof that the trophy quality (antler score) of the existing herd is similar to the animals hunted off over the last three years. Many of these animals were purchased “hunt ready”, already bearing hunt-worthy antlers and the remaining animals in the herd are not linked to these values. The owners have not provided purchase receipts to substantiate that the existing herd is as valuable as the trophy animals already hunted off. The remaining animals not hunted out each year are harvested for velvet. Mr. Wehrkamp insists that the herd is basically for hunt, but the farm sold at least $120,000 of velvet in 2013 as attested Dr. Jim McLane of the Battleford District Office. (4000 lbs @$30 per lb - 2013 price)
Together with the information provided by Mr.Wehrkamp for the prospective sale of 2014 hunt bulls from various suppliers (price lists) averaging $4500 and an invoice provided by Bentley for the recent purchase of 17 replacement trophy bulls for $72,500 for 2014 hunt season I will assign a value of $4500 to a trophy bull. Since velvet should average at least $700 per bull for 2014 (20lb at $35 per lb.) and meat value average of $1675 per bull, (AWAPCO average slaughter value for the March 13 and 27/14 slaughter dates) a value of $2375 will be assigned to a velvet/meat bull.
With the assignment 15% of the approximately 200 animals in the mature herd being of trophy quality (approximately 31/200) I will assign a weighted composite (hunt, velvet, meat) value of $2700 to each animal aged 2010 and older. (85% of $2375 = $2019) plus (15% of $4500 = $675) equals $2700.)
Similarly 2011 animals to be assigned $1800 ($1275 meat and $525 velvet; AWAPCO return average plus 15 lb velvet at $35 lb) and $1400 ($1050 meat and $350 velvet; AWAPCO average slaughter value plus 10 lb velvet at $35 lb) to 2012 animals based on meat/velvet values.
SNOR 901W will be assigned $8000 since a receipt of $9250 was provided.
Points to review.
1. Velvet sales play a significant part of total herd income. … at least $120,000 for 2013.
2. Dr. Bischop’s assigned value of $4800 to the hunt herd is premised on the fact that the entire herd is made up of trophy bulls. I have asked WHGF and Mr. Wehrkamp at least three separate times for receipts and/or documentation to validate that is the case. Nothing was provided. My assignment of $4500 is based on Mr. Brown’s recent purchase of 17 “like” (similar to the year before) trophy bulls and the price lists for suppliers for the 2014 hunt year.
3. For the last five years WHGF has averaged 31hunts/year with a large number of trophy bulls being purchased just prior to the hunts as being "hunt ready". Animals hunted out each year do not give an accurate profile of what remains in the herd.
4. 15% of the mature herd has been assigned trophy status... approximately 31 hunts per year for the past five years of approximately 200 in the mature herd.
[signature]
Greg Graham DVM May 2/14
VI. LEGAL FRAMEWORK A. The Legislation [31] I set out the applicable legal framework for an appeal of this nature in my decision in Alsager v Canada (Agriculture and Agri-Food), 2011 FC 1071 [Alsager] which the Respondent has ably summarized in written submissions as set out below.
[32] The issue in this matter is limited to the question of whether compensation issued to the Appellant is reasonable. The Act states:
Appeal
Appel
56. (1) A person who claims compensation and is dissatisfied with the Minister’s disposition of the claim may bring an appeal to the Assessor, but the only grounds of appeal are that the failure to award compensation was unreasonable or that the amount awarded was unreasonable.
56 (1) Il peut être interjeté appel devant l’évaluateur soit pour refus injustifié d’indemnisation, soit pour insuffisance de l’indemnité accordée.
…
…
[33] In Siclo, above, Blanchard J. noted that in terms of the adequacy of compensation pursuant to the Act, “we must rely on the test of what is reasonable.”
[34] In Alsager, above, the Appellant sought to appeal the compensation awarded by the Minister for the depopulation of his elk due to CWD under the Act. As Deputy Assessor, I confirmed that the grounds for appeal “are limited to whether the failure to award compensation was unreasonable, or whether the amount awarded was unreasonable.”
[35] In response to issues raised by the Appellant in Alsager related to the compensation process established under the Act, I stated that the Appellant’s general views were both complex and controversial political issues that belonged in the political forum:
... In any event, they belong in the political forum and I am sure that Mr. Alsager, who was both forceful and forthright in representing himself before me, is fully aware that these general views need to be pursued and tested in the political arena. All that the Court can do is to determine whether, given the present scheme that Parliament has devised, and the methodologies and criteria used to evaluate his animals in this case, the compensation he received was reasonable.
[36] In Ferme Avicole Heva Inc v Canada (Agriculture), [1998] FCJ No 1021 (TD) [Ferme Avicole Heva Inc], Tremblay-Lamer J. stated that lost profit or value to the owner was not the same as market value when determining compensation:
[38] It has been established in the case law that the value to the owner does not correspond to fair market value, and that the compensation was not intended to compensate the owner for its lost profits by putting it back into the same position as it was in before the animals were destroyed.
[37] In Siclo, above, Blanchard J. outlines the applicable legislation, beginning at paragraph 22, respecting the Minister’s authority to order the destruction of animals and the discretion to order compensation corresponding to the fair market value of the animal at the time of its destruction:
[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.
[38] Subsection 48(1) of the Act states:
48.(1) The Minister may dispose of an animal or thing, or require its owner or any person having the possession, care or control of it to dispose of it, where the animal or thing
48 (1) Le ministre peut prendre toute mesure de disposition, notamment de destruction, — ou ordonner à leur propriétaire, ou à la personne qui en a la possession, la responsabilité ou la charge des soins, de le faire — à l’égard des animaux ou choses qui :
(a) is, or is suspected of being, affected or contaminated by a disease or toxic substance;
a) soit sont contaminés par une maladie ou une substance toxique, ou soupçonnés de l’être;
(b) has been in contact with or in close proximity to another animal or thing that was, or is suspected of having been, affected or contaminated by a disease or toxic substance at the time of contact or close proximity; or
b) soit ont été en contact avec des animaux ou choses de la catégorie visée à l’alinéa a) ou se sont trouvés dans leur voisinage immédiat;
(c) is, or is suspected of being, a vector, the causative agent of a disease or a toxic substance.
c) soit sont des substances toxiques, des vecteurs ou des agents causant des maladies, ou sont soupçonnés d’en être.
[39] Section 51 of the Act addresses compensation to owners of animals:
51. (1) The Minister may order compensation to be paid from the Consolidated Revenue Fund to the owner of an animal that is
51 (1) Le ministre peut ordonner le versement, sur le Trésor, d’une indemnité au propriétaire de l’animal :
(a) destroyed under this Act or is required by an inspector or officer to be destroyed under this Act and dies after the requirement is imposed but before being destroyed;
a) soit détruit au titre de la présente loi, soit dont la destruction a été ordonnée par l’inspecteur ou l’agent d’exécution mais mort avant celle-ci;
(b) injured in the course of being tested, treated or identified under this Act by an inspector or officer and dies, or is required to be destroyed, as a result of the injury; or
b) blessé au cours d’un examen ou d’une séance de traitement ou d’identification effectués, au même titre, par un inspecteur ou un agent d’exécution et mort ou détruit en raison de cette blessure;
(c) reserved for experimentation under paragraph 13(2)(a).
c) affecté à des expériences au titre du paragraphe 13(2).
(2) Subject to subsections (3) and (4), the amount of compensation shall be
(a) the market value, as determined by the Minister, that the animal would have had at the time of its evaluation by the Minister if it had not been required to be destroyed
Minus
(b) the value of its carcass, as determined by the Minister.
(2) Sous réserve des paragraphes (3) et (4), l’indemnité payable est égale à la valeur marchande, selon l’évaluation du ministre, que l’animal aurait eue au moment de l’évaluation si sa destruction n’avait pas été ordonnée, déduction faite de la valeur de son cadavre.
(3) The value mentioned in paragraph (2)(a) shall not exceed any maximum amount established with respect to the animal by or under the regulations.
(3) La valeur marchande ne peut dépasser le maximum réglementaire correspondant à l’animal en cause.
(4) In addition to the amount calculated under subsection (2), compensation may include such costs related to the disposal of the animal as are permitted by the regulations.
(4) L’indemnisation s’étend en outre, lorsque les règlements le prévoient, aux frais de disposition, y compris de destruction.
[40] The Minister’s discretion to compensate is limited by maximum amounts established under the Compensation for Destroyed Animals Regulations:
2. For the purpose of subsection 51(3) of the Act, the amount that is established as the maximum amount with respect to an animal that is destroyed or required to be destroyed under subsection 48( I ) of the Act is
2 Pour l’application du paragraphe 51(3) de la Loi, la valeur marchande d’un animal qui est détruit ou qui doit l’être en application du paragraphe 48(1) de la Loi ne peut dépasser :
(a) if the animal is set out or included in column 1 of an item of the schedule, the amount set out in column 3 of that item; and
a) le montant prévu à la colonne 3 de l’annexe, pour tout animal visé à la colonne 1;
(b) in any other case, $30.
b) 30 $, dans tout autre cas.
[41] In the particular case of elk, the schedule, pursuant to the above noted s 2(a) of the Compensation for Destroyed Animals Regulations, provides that the maximum amount the Minister may award is as follows:
39. Elk (Cervus elaphus) Bull, 1 year and older Cervidae 8,000
40. Elk (Cervus elaphus) All elk other than those Cervidae 4,000
referred to in item 39
[42] In Donaldson v Canada (Minister of Agriculture), 2006 FC 842 [Donaldson], Kelen J. stated that the proper approach when determining the reasonable amount to award for the compensation of an animal destroyed under the Act is the market value that the animal had at the time of destruction, subject to any maximum amount referred to in s 51(3) of the Act.
[43] The Act also provides direction on the powers of the Assessor, potential costs and finality of the Assessor’s decision where an appeal has been brought by the person who claims compensation:
57. (1) On hearing an appeal, the Assessor may confirm or vary the Minister’s disposition of the claim or refer the matter back to the Minister for such further action as the assessor may direct.
57 (1) L’évaluateur qui entend l’appel peut confirmer ou modifier la décision du ministre ou renvoyer l’affaire à celui-ci pour qu’il y soit donné suite de la manière que lui-même précise.
(2) Costs may be awarded to or against the Minister in an appeal.
(2) Les frais peuvent être accordés au ministre ou mis à sa charge.
(3) The decision of the Assessor on an appeal is final and conclusive and not subject to appeal to or review by any Court.
(3) Les décisions de l’évaluateur ne sont pas susceptibles d’appel ou de révision.
[44] I confirmed the framework and principles as set out above in my capacity as Deputy Assessor in Alsager, above.
B. The Common Procedures Manual [45] Both sides acknowledge the relevance of the Common Procedures Manual as a guide to the compensation process.
[46] Subsection 12.1.2 of the Common Procedures Manual makes it clear that eligibility for the payment of compensation includes “animals ordered destroyed pursuant to section 48 of the Health of Animals Act, including animals that die before they are destroyed.”
[47] Subsection 12.1 of the Common Procedures Manual requires CFIA, inter alia, to provide the owner of the animals with an explanation of “the basis of awarding the compensation.”
[48] The evaluation team approach to compensation that was used in the present case is governed by ss 12.3.2 and 12.3.3 of the Common Procedures Manual:
12.3.2 Establishing an Evaluation Team
3. Use an evaluation team in the following circumstances:
• the above conditions for a sole evaluator are not met; or
• the market value of the animal and/or thing cannot be readily established.
4. An evaluation team must include the following:
• a CFIA veterinary inspector to chair the team;
• an industry expert evaluator selected by the CFIA; and
• an industry expert evaluator selected by the owner and acceptable to the CFIA.
5. Confirm that the industry experts named to the evaluation team are knowledgeable of the market values of the following:
• the species type, class, and breed of animals being evaluated; and
• any things being evaluated, such as milk, eggs, semen, embryos, hay, fodder, feed stuffs, fertilizer, packing materials, and containers.
6. Confirm that each individual engaged as an industry expert evaluator is free of any conflict of interest in relation to the owner of the animals or things being evaluated, or in relation to the animals or things being evaluated.
12.3.3 Evaluation
7. On behalf of the CFIA, enter into a contractual agreement for evaluation services with each industry expert evaluator. Use standard contract documents, and add the following statements:
• Contractors are aware and understand that, under the Health of Animals Act, the Minister may pay compensation to the owner of an animal or thing that is destroyed under that Act and that the amount of compensation shall be the market value (up to the maximum amount allowed), according to the Compensation for Destroyed Animals Regulations schedule (section 3) and (as determined by the Minister) that the animal would have had at the time of its evaluation – less any carcass salvage value – had it not been ordered destroyed.
• Contractors act as follows:
◦ They provide, in writing to the CFIA, an opinion of the market value of each animal or thing evaluated, together with the reasons for holding that opinion of the market value.
◦ They acknowledge that they were provided with the Minister’s definition an understanding of market value and how it is to be assessed, as set out in this section of the manual.
◦ They declare freedom from conflict of interest in relation to the owner of the animal or thing being evaluated, or in relation to the animal or thing being evaluated.
[49] The central concept of “market value” and how it must be established is set out in s 12.4 of the Common Procedures Manual:
12.4 Market Value
This section ensures a common understanding of market value among owners, industry experts, and the Canadian Food Inspection Agency (CFIA).
For the purpose of awarding compensation, market value is the value that the animal or thing would have had at the time of its evaluation if it had been sold in the open market (i.e. to a willing buyer from a willing seller) and not been ordered destroyed.
12.4.1 General Procedures
1. Consult the network veterinary program specialist to determine the amounts of compensation that have been awarded recently for similar animals. This discussion should always occur before the owner is given the compensation form. (Form CFIA/ACIA 4203 - Requirement to Dispose and Award of Compensation and Form CFIA/ACIA 4210 - Requirement to Dispose and Award of Compensation [for Things] should be used in conjunction with Form CFIA/ACIA 4202 -Requirement to Dispose of Animals or Things.)
2. The maximum values found in the Compensation for Destroyed Animals Regulations are reviewed on a periodic basis and adjusted to reflect current market values.
3. Confirm the understanding of market value with the owner by asking the owner to provide the following:
• bills of sale and receipts for relevant transactions during the past two years, for reference purposes; and
• relevant pedigrees and production records.
4. Confirm the industry expert’s understanding of market value by clarifying that market value should be as follows:
• comparable to the price paid by a willing buyer to a willing seller in an arm’s-length transaction for comparable animal or thing;
• based on current prices charged by local suppliers; or
• based on current prices paid by marketing agents or agencies for milk, eggs, etc.
[50] The Common Procedures Manual provides specific guidance on the valuation of animals and things in s 12.6:
12.6 Evaluating Animals and Things
This module provides guidance on the evaluation of animals and things.
1. The evaluation team must conduct a market value assessment, which includes a review of current price information derived from animal industry sales of similar breeds and types of the relevant species, such as the following:
• local auction markets;
• stockyards;
• herd dispersal and production sales;
• sales held in conjunction with shows and exhibitions; and
• documented private treaty transactions.
2. Complete an evaluation report documenting the evaluation of each animal eligible for compensation, using the worksheets in modules 12.16 and 12.17, and Module 12.5: Economic Model - Evaluating Poultry With No Readily Available Market. The worksheets may be modified if necessary.
3. The industry expert evaluators, selected jointly by the owner and the Canadian Food Inspection Agency (CFIA), describe and evaluate each animal or group of animals eligible for compensation. Their determinations are recorded on the evaluation worksheet by the veterinary inspector who chairs the team.
4. Industry expert evaluators must base their opinions of the market value of each animal eligible for compensation on the following:
• their assessment of the relevant characteristics of each animal, including the following:
◦ type (e.g. dairy, beef, layer, broiler),
◦ breed,
◦ class or purpose (e.g. breeding, meat, velvet, milk), o age (may require looking at dentition),
◦ gender,
◦ genetic merit (examining records of production or performance), or pedigree (grade vs. purebred),
◦ stage of production or pregnancy (e.g. open, pregnant, nursing, stocker, weaned),
◦ production level of milk, velvet, wool, litter size, multiple births,
◦ conformation (e.g. physical defects, body weight and size for type or breed purpose),
◦ physical condition,
◦ special health status, such as specific pathogen free, and
◦ other features of the animal not included in the above factors and which reflect, in most cases, the availability of a comparable animal in the open market;
• their knowledge of prices paid for comparable animals in the open market place, obtained during the evaluation team’s market value in accordance with Module 12.4: Market Value; and
• making no allowance for past market prices or anticipated future values.
5. The owner and the evaluation team may agree to group animals of the same type, class or purpose, age, gender, stage of production, physical condition, and weight to establish the market value of each animal in the group. For example, each animal in a group of finished beef breed steers weighing 440-460 kg and in good physical condition may be assigned the same market value. Similarly, each bird in a flock of leghorn hens at 95 days laying may be assigned the same value.
6. In the case of an animal for which registration papers are unavailable or have not been transferred into the name of the owner, the following should occur:
• the industry expert evaluators should determine both grade and purebred market values;
• the CFIA veterinary inspector should award compensation based on the grade market value; and
• supplementary compensation based on the difference between the grade market value and the purebred market value should be awarded when the registration papers are provided to the CFIA, if they are received within 90 days of the date the animal was evaluated.
7. All members of the evaluation team sign an evaluation worksheet for each animal or group of animals evaluated, as well as the record of values for things, and any notes for the rationale or justification of the values assigned.
8. In cases where the evaluation team is unable to reach agreement, the industry and CFIA evaluation experts should each present a written report, along with supporting documentation, to the evaluation team chair. The chair (i.e. CFIA district veterinarian or staff) will determine the compensation to be awarded and outline the reasons in an evaluation chair report. All compensation may be appealed.
[51] In the present case, s 8 of 12.6 came into play because the evaluation team was unable to reach agreement.
[52] While both sides acknowledged the importance of the Common Procedures Manual, both Dr. Graham and Dr. Bischop acknowledged that it provides guidelines, but there was also some flexibility in the evaluation process.
VII. THE ISSUE [53] The issue before the Court, as Assessor, is whether, in accordance with s 56(1) of the Act, the compensation awarded by the Minister in this case was unreasonable, and whether in accordance with s 57(1) of the Act, the Court, as Assessor, should confirm or vary the Minister’s disposition or refer the matter back to the Minister for such further action as the Court, as Assessor, should direct.
VIII. MR. WEHRKAMP’S ROLE [54] Mr. Wehrkamp’s role in the appeal process is somewhat ambivalent. He was appointed as the industry expert evaluator under s 12.3 of the Common Procedures Manual at which time he must have been “acceptable to the CFIA” under s 12.3.2(4) and “free of any conflict of interest” under s 12.3.2(6). Mr. Wehrkamp has not put himself forward as an “expert witness” in the appeal, but he is both a witness and the advocate for the Appellant. Indeed, the evidence shows that he immediately took up the Appellant’s cause after Dr. Graham made his recommendations. The Respondent has not objected to Mr. Wehrkamp playing this dual role – it may make some sense in the context of an appeal under s 56(1) of the Act – but in assessing Mr. Wehrkamp’s evidence and his arguments, the Court has to remain aware that he is acting as both witness and advocate for the Appellant. Dr. Graham and Dr. Bischop were also involved in the compensation evaluation (Dr. Graham as the Chairperson and Dr. Bischop as the CFIA expert), but Dr. Graham and Dr. Bischop have only given evidence as witnesses in the appeal process. They are not acting as advocates for CFIA although, inevitably, in giving evidence they were being asked to justify their previous decisions.
[55] Neither of the Appellant’s two owners, Mr. Bentley Brown and Mr. Keith Conacher, were called as witnesses. This means that they could not be cross-examined under oath on their refusal to produce the receipts and invoices that Dr. Graham repeatedly asked for. Mr. Wehrkamp has provided an explanation (the receipts were not available or relevant), but irrelevancy does not prevent them from being produced. Dr. Graham and/or the Court could have decided the issue of relevance themselves, and Mr. Wehrkamp’s position on this issue could have been tested.
[56] I have no reason to think that Mr. Wehrkamp testified in any way that was less than truthful, but his joint role as witness and advocate sometimes mingled in a way that requires the Court to be particularly careful when examining the Appellant’s evidence to ensure that it provides an objective evidentiary basis for the severe criticism levelled against CFIA, and Dr. Graham in particular.
IX. A