PURSUANT TO THE HEALTH OF ANIMALS ACT
Ottawa, Ontario, December 15, 2006
PRESENT: The Honourable Mr. Justice Kelen, Deputy Assessor
BETWEEN:
and
THE MINISTER OF AGRICULTURE OF CANADA
REASONS FOR ASSESSMENT AND ASSESSMENT
[1] This is an appeal to the Assessor under section 56 of the Health of Animals Act, S.C. 1990, c. 21 (Act) from a decision of the Minister of Agriculture compensating the appellant for cattle and sheep ordered destroyed by the respondent. The ground of the appeal is that the amount awarded to the appellant was unreasonable.
Facts
[2] On November 5, 1991, the respondent ordered that the appellant’s cattle and sheep be destroyed in accordance with section 48 of the Health of Animals Act. The animals were found to be exposed to tuberculosis.
[3] The appellant, Mr. Terry Kreshewski is a beef producer in Rossburn, Manitoba. In 1991, the following animals were destroyed as a result of exposure to tuberculosis: 54 beef cows; 3 beef bulls; 57 young beef cows or heifers; 2 sheep; and 38 young beef cows or heifers which he shared with his neighbour Mr. Burt Frieze and which were looked after by Mr. Kreshewski on his farm.
Compensation
[4] Pursuant to paragraph 51(1)(a) of the Act, the respondent compensated the appellant for the destruction of his animals and the animals which he shared with Burt Frieze. The compensation paid was in the approximate amount of $110,000. The respondent provided a Declaration of Infected Place and Award of Compensation certifying that tuberculosis as found or suspected to exist in the appellant’s cattle and sheep, for which compensation was paid accordingly.
Relevant Legislation
[5] The legislation relevant to this appeal is:
1. Health of Animals Act, S.C. 1990, c. 21 (Act); and
2. Maximum Amounts for Destroyed Animals Regulations, SOR/91-222 (Regulations).
The relevant excerpts of these authorities are set out in Appendix “A” following these reasons.
Issues
[6] The only issue in this appeal is whether the amount awarded to the appellant for his animals was unreasonable.
Analysis
[7] Subsection 56(1) of the Act provides that the grounds of appeal to the Assessor are “that the failure to award compensation was unreasonable or that the amount awarded was unreasonable.” In this case, the decision being appealed was one in which the appellant was compensated. Therefore, the ground of appeal is whether the amount of compensation paid for the cattle and sheep was unreasonable.
Appellant’s Position
[8] The appellant submits that the amount he was compensated was unreasonable. He argues that he cannot replace his herd with cattle of equal quality with the amount of compensation he received.
[9] The appellant also argues that the calves which were ordered destroyed would normally have been fed to slaughter weight. The appellant therefore argues that he lost the added value the cattle would have had if the respondent had not ordered the early slaughter of his cattle.
[10] The appellant seeks compensation for costs of maintaining the quarantine ordered by the respondent. This is the cost of preparing a double fence in the pasture to keep the quarantined animals, extra manpower to maintain the quarantine, the building of a corral to round-up the cattle, the trucking to bring the cattle home, and the hiring of a CAT to clear the fence-line. These expenses related to the cost of maintaining the quarantine total $4,200. The appellant also seeks compensation for the cost of cleaning-up and disinfecting his facilities after the diseased cattle were destroyed. These costs total $1,600.
Respondent’s Position
[11] The respondent argues that compensation was paid to the appellant in respect of the cattle and sheep either at market value or pursuant to the maximum amounts provided under the Maximum Amounts for Destroyed Animals Regulations (the 1991 Regulations).
[12] In a letter dated February 27, 1992, Dr. Luterbach, a Regional Veterinary Supervisor, described the method used by the respondent in determining the compensation payable to the appellant:
In the case of cattle Tuberculosis, Canada has a test and slaughter policy. This means that all test positive cattle are destroyed along with all herd mates which are deemed to have been exposed to infected animals.
Compensation is paid for all cattle destroyed at “market value” to a ceiling of “maximum limits”.
In the case of all the above livestock producers, the evaluation process was the same. A “team approach” was taken. [Agriculture] Canada used Livestock Markets Information Officer, the local District Veterinarian (Animal Health), and myself the Regional Veterinary Supervisor (Animal Health). The producer was invited to secure evaluation expertise. In the case of Bartkiw and Baker, an external purebred breed representative was consulted to establish “fair market value”. A livestock auction mart owner/buyer also assisted Bartkiw. The owners of the livestock were knowledgeable and most had previous sales receipts to support their expectations.
The Livestock Markets Information Officer has years of daily experience at the sales ring, witnessing the price paid for class of animal. He also had weekly market reports from all the weeks of the fall at all the markets in Manitoba. Reports were also used from special bred cow sales to establish the cow prices. More commonly the market sales consist of cattle going for fattening or immediate slaughter for meat.
The livestock were either evaluated individually or grouped into similars by age, class, type, sex, and weight. For example a feeder calf has a different market price per pound based upon weight range (100 lb increments), whether it is a steer or a heifer, age and type (traditional British versus Exotic breeds – reflects growth rate and finish weight potential).
The appropriate price (we used best market price not average market price of non diseased animals) is multiplied by estimated weight (we were generous with the weight because none of the producers had a livestock scale) and recorded an individual amount corresponding to a permanent eartag applied by [Agriculture] Canada. In the case of animals where the price exceeded the maximums allowed by the Health of Animals Act and Regulations, the maximum price was recorded.
One does not know what is the fair market value of diseased animals (if one could sell them on the open market) but the salvage price for those exposed but not diseased animals at slaughter was about 30% of full market value. The 70% was absorbed by [Agriculture] Canada as part of the compensation.
It was my opinion that the open market prices of livestock below the maximums were not a concern, but those which exceeded the maximum were. It was explained to all concerned that the maximums can not be exceeded by the powers of the Act and Regulations.
Other costs compensatable [sic] were the slaughter charges, transportation of livestock to the packing plant and cleansing and disinfecting of the transporting trucks.
All other costs such as loss of income and cleaning and disinfecting the farm, etc. are not compensatable [sic].
[Emphasis added]
The Witnesses
[13] The evidence before the Assessor was given orally. The appellant testified as his only witness, and the respondent called three witnesses. The witnesses for the respondent were:
1. Dr. Brian Manns, District Veterinarian for the Canadian Food Inspection Agency;
2. Mr. Harold Boutlier, Livestock Market Information Officer for Manitoba; and
3. Dr. G.W. Luterbach, Regional Veterinarian for Agriculture Canada.
The market value for cattle
[14] Under subsection 51(2) of the Health of Animals Act, the amount of compensation which the Minister may order be paid to the owner of an animal that is destroyed under the Act is the market value that the animal would have had at the time of its destruction, subject to any maximum amount referred to in subsection 51(3).
[15] During the hearing, there was some confusion between the parties as to the number of the appellant’s cattle ordered destroyed. In addition to the appellant’s own cattle, the appellant also maintained cattle shared between him and another farmer, Bert Frieze. The appellant advised, however, that he does not take issue with the number of animals for which he was compensated. Rather, he seeks a reassessment of the amount of compensation awarded to him for those animals.
[16] Several of the appellant’s cattle were compensated at the maximum amount provided under the 1991 Regulations, which was $1,500 for a purebred cow and $1,000 for a grade cow. The appellant led evidence indicating that the maximum amounts provided under the 1991 Regulations did not reflect the true market value of the animals. The Manitoba Cattle Producers Association made submissions to the Minister on behalf of the appellant and other cattle producers whose herds were ordered destroyed as a result of the tuberculosis outbreak. The Association complained about the maximum amount of $1,000 for grade cattle, which were valued in the range of $1,200 to $1,500.
[17] The Association’s lobbying efforts were in vain. However, the Regulations were amended in 1992 to provide for a maximum of $1,500 of compensation for grade cattle and $2,000 for purebred cattle. The Regulations were further amended in 2001 to provide a maximum of $2,500 for cattle regardless of their purebred status. As I indicated during the hearing, I must apply the law that was in effect at the time the cattle were ordered destroyed in accordance with the Act. Accordingly, I cannot require the Minister to increase the amount of compensation awarded to the appellant in respect of those animals for which the appellant received the maximum amount payable under the 1991 Regulations.
[18] With respect to the remaining cattle for which the appellant was awarded less than the maximum amount, I have considered carefully the evidence presented during the hearing concerning the manner in which the respondent assessed the market value of the appellant’s cattle.
[19] Mr. Boutlier, the Livestock Market Information Officer for Manitoba at the time of the award, testified as to the process by which he estimated the weight of each cow and assessed its market value. He testified that, based on information gathered in the course of attending weekly local cattle auctions, he had compiled statistics for each type of cow including the appropriate value per pound or total value. Mr Boutlier, who is now retired, presented as a conscientious public servant; I accept his evidence as thorough, credible and trustworthy.
[20] For each of the appellant’s cattle whose value did not obviously exceed the maximum amount under the 1991 Regulations, Mr. Boutlier estimated the cow’s weight and assessed its market value based on the statistical auction information he had compiled. Instead of assessing the average price paid at auction, the appellant’s cattle were assigned a premium rate equal to the highest price paid per pound in the open market.
[21] The on-site assessment did not, however, include the use of a certified scale. The witnesses described concerns about contamination which might result from such a practice. While the absence of a scale concerns me, I am satisfied that Mr. Boutlier’s estimation of each cow’s weight was reliable. He has considerable experience with cattle and was accustomed to estimating weight. He also described applying “liberal” estimates, and I accept that any margin of error would likely have been applied in the appellant’s favour. Moreover, the appellant was advised of the opportunity to retain an independent valuator, at the respondent’s expense, to be present during the assessment of the appellant’s cattle. The appellant did not avail himself of this opportunity. Based on the evidence, I cannot conclude that the respondent’s determination of the market value of the appellant’s cattle was unreasonable.
Quarantine, clean-up and disinfection costs
[22] The appellant also seeks compensation for the costs he incurred in maintaining the quarantine, including the installation of double fencing, clean-up and disinfection of his farm. As discussed above, costs for maintaining the quarantine totalled $4,200 and the cost for the clean-up and disinfection totalled $1,600. All of these costs are real costs to the appellant. However, the law does not provide authorization to the Minister to compensate cattle producers for the very real costs incurred in the course of maintaining quarantine and undertaking the clean-up and disinfection. Instead, these costs are to be assumed by the farmers whose cattle were quarantined and/or ordered destroyed to protect public health.
[23] As part of the Manitoba Cattle Producers Association’s petition to the Minister, the Association noted the “huge” costs incurred by cattle producers to disinfect and clean up their beef facilities so they could be removed from quarantine. Apparently one minister promised compensation, but a subsequent minister declined to do so. As a result, the Manitoba cattle producers affected by the 1991 outbreak did not receive an ex gratia payment for these expenses.
[24] Mr. Kreshewski, like other cattle producers, is naturally very upset that the amount of compensation he received did not represent his true loss. However, as I indicated during the hearing, I am bound to apply the law as it applied at the time the award was made. Thus, there is no legal basis on which I can order the Minister to compensate the appellant for these expenses. I must therefore dismiss this appeal. In Vanderwees Poultry Farm v. Canada (Minister of Agriculture), [ 1993] F.C.J. No. 583. Mr. Justice Rothstein (as he then was) acting as an Assessor under the Health of Animals Act made some strong statements about the manifest unfairness of the law regarding compensation for farmers in cases such as Mr. Kreshewski. Justice Rothstein held at paragraph 35 that the Health of Animals Act does not allow compensation to be paid when quarantine is ordered even though the farmer is entirely innocent and is a victim of a necessary, but damaging quarantine order. Justice Rothstein held at paragraph 35:
It seems to me to be manifestly unjust that an innocent party must bear the loss in such circumstances. The quarantine order was issued to protect the public. To my mind it follows logically, if not legally, that the public should pay for the cost associated with such protection. Nonetheless, I acknowledge that the Act (Health of Animals Act) does not empower me to order compensation.
[25] While the circumstances in the Vanderwees Poultry Farm case were different than Mr. Kreshewski’s, the same principle of fairness applies. Until the law is changed, an Assessor under the Health of Animals Act cannot order compensation be paid for these expenses.
ASSESSMENT
THE ASSESSOR HEREBY ORDERS THAT:
- This appeal is dismissed; and
- The parties shall pay their own costs.
“Michael A. Kelen”
Deputy Assessor
Appendix “A”
RELEVANT LEGISLATION
1. Health of Animals Act, S.C. 1990, c. 21 [in effect November 5, 1991]
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DISPOSAL AND TREATMENT Disposal of affected or contaminated animals and things
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
(a) is, or is suspected of being, affected or contaminated by a disease or toxic substance;
(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
(c) is, or is suspected of being, a vector, the causative agent of a disease or a toxic substance. […]
COMPENSATION Compensation to owners of animals
51. (1) The Minister may order compensation to be paid to the owner of an animal that is
(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;
(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
(c) reserved for experimentation under paragraph 13(2)(a).
Amount of compensation
(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.
Maximum value
(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.
Additional compensation
(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.
[…]
Regulations
55. The Minister may make regulations
(a) respecting the method of calculating the market value of animals for which the Minister considers there is no readily available market;
(b) establishing maximum amounts, or the manner of calculating maximum amounts, for the purpose of subsection 51(3); and
(c) permitting compensation for any costs related to the disposal of animals and things and for determining the amounts of the compensable costs, including prescribing maximum amounts.
Appeal
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. […]
Powers of Assessor
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.
Costs
(2) Costs may be awarded to or against the Minister in an appeal.
Decisions final
(3) The decision of the Assessor on an appeal is final and conclusive and not subject to appeal to or review by any court. |
ISPOSITION ET TRAITEMENT Mesures de disposition
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) soit sont contaminés par une maladie ou une substance toxique, ou soupçonnés de l'être;
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) soit sont des substances toxiques, des vecteurs ou des agents causant des maladies, ou sont soupçonnés d'en être. […]
INDEMNISATION Indemnisation: animal
51. (1) Le ministre peut ordonner le versement d'une indemnité au propriétaire de l'animal:
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) 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) affecté à des expériences au titre du paragraphe 13(2).
Montant de l'indemnité
(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.
Plafond
(3) La valeur marchande ne peut dépasser le maximum réglementaire correspondant à l'animal en cause.
Indemnité supplémentaire
(4) L'indemnisation s'étend en outre, lorsque les règlements le prévoient, aux frais de disposition, y compris de destruction.
[…]
Règlements
55. Le ministre peut, par règlement:
a) régir le mode de calcul de la valeur marchande des animaux difficilement commercialisables selon lui;
b) fixer les plafonds des valeurs marchandes des animaux ou des choses ou leur mode de calcul;
c) autoriser l'indemnisation pour frais de disposition - notamment par destruction - d'animaux ou de choses et fixer soit le montant de celle-ci ainsi que le plafond, soit le mode de leur détermination.
Appel
56. (1) Il peut être interjeté appel devant l'évaluateur soit pour refus injustifié d'indemnisation, soit pour insuffisance de l'indemnité accordée. […]
Pouvoirs de l'évaluateur
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.
Frais
(2) Les frais peuvent être accordés au ministre ou mis à sa charge.
Dernier ressort
(3) Les décisions de l’évaluateur ne sont pas susceptibles d’appel ou de révision.
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2. Maximum Amounts for Destroyed Animals Regulations, SOR/1991-222 [in effect November 5, 1991]
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MAXIMUM AMOUNTS
2. The maximum amount that may be paid to the owner of the following types of cattle that are destroyed or required to be destroyed under paragraph 48(1)(a) or (b) of the Health of Animals Act because of an area or herd disease eradication program for brucellosis or tuberculosis is
(a) $1,800 for each such purebred dairy animal;
(b) $1,200 for each such grade dairy animal;
(c) $1,500 for each such purebred beef animal; and
(d) $1,000 for each such grade beef animal. |
PLAFONDS DES VALEURS MARCHANDES
2. La plafond de la valeur marchande payable au propriétaire d’un bovin devant être détruit en application des alinéas 48(1)a) ou b) de la Loi sur la santé des animaux dans le cadre d’un programme d’éradication de la vrucellose ou de la tuberculose dans une région ou un troupeau est de :
a) 1 800$ pour un animal laitier pure race;
b) 1 200$ pour un animal laitier sans race particulière;
c) 1 500$ pour un animal de boucherie pure race;
d) 1 000$ pour un animal de boucherie sans race particulière. |
HEALTH OF ANIMALS REGISTRAR OF APPEALS
NAME OF COUNSEL AND SOLICITORS OF RECORD
DOCKET: P-9-92
STYLE OF CAUSE: TERRY KRESHEWSKI v. THE MINISTER OF AGRICULTURE CANADA
DATE OF HEARING: December 5, 2006
AND ASSESSMENT: KELEN J., DEPUTY ASSESSOR
APPEARANCES:
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Terry Kreshewski
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(ON BEHALF OF HIMSELF)
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Dhara Drew
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SOLICITORS OF RECORD:
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Terry Kreshewski SELF-REPRESENTED
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John H. Sims, Q.C. Deputy Attorney General of Canada
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