WILLOW HOLLOW GAME RANCH LTD. Appellant v. THE MINISTER, 2016 FC 343

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. ARGUMENTS A.

Appellant [ 57 ] Essentially, the Appellant argues that CFIA failed to recognize and value its primary hunt business. WHGR says that the evidence before Dr. Graham was that the order of revenue from its elk business was hunt, velvet and meat sales, so that the Appellant is primarily a hunt business, even though it also has velvet and meat revenues. [ 58 ] CFIA failed to take into account that the Appellant was rebuilding its elk herd following the 2009 depopulation (when 550 elk were destroyed) and that only half that number of elk were destroyed in 2014 because the rebuilding process was still under way.

This meant that the Appellant was retaining genetically superior – and therefore more valuable – bulls as part of the rebuilding process. This is why the Appellant was selling hunt-ready animals acquired from other producers. The Appellant was not marketing its own hunt- ready animals because they were required for breeding purposes and so were not actively marketed. Only those bulls that were six years or older were hunt-ready and available for sale as hunt animals or to other hunt properties.

Even though the bulls at the WHGR were of hunt or breeding quality, the Appellant was not in a position to sell hunt-ready or breeding bulls because the whole herd was at 50 percent capacity and was still being rebuilt after the 2009 depopulation. [ 59 ] In rebuilding the herd following the 2009 depopulation, the Appellant acquired groups of bulls from different producers [block-purchase]. Block-purchases involve a single, agreed-to-price, for a group of animals of mixed ages and mixed genetic value.

These animals were then subjected to a fairly aggressive culling process each year so that only the better – and therefore more valuable – animals were retained and used for velvet sales and the rebuilding of the herd. Fifty-five bulls had been culled in 2013 as part of this culling process and had been sold for meat. [ 60 ] In its evaluation, CFIA failed to understand and/or take into account the enhancements in value that the rebuilding process had produced in those animals that were destroyed in 2014.

Through culling, animals that fell below the ranch standard were sold for meat each year and the bulls retained were those expected to become hunt bulls at six years of age. [ 61 ] CFIA insisted upon purchase receipts for the animals left in the herd as an indicator of genetic and market value. But purchase receipts would not – and could not – provide a reasonable indication of the animals retained in the herd after culling.

This is because block-purchasing involves the acquisition of animals of a different quality and value for a fixed, global price, and those animals that do not meet the standard required to build the value of the herd over time are culled each year. [ 62 ] The Appellant points to the solid evidence produced to show that values in the elk industry for meat, velvet and hunt animals have appreciated considerably over the past five years.

This shows that purchase prices from prior years could not reflect the 2014 value of an elk herd that has been significantly culled to improve the value of remaining animals. [ 63 ] CFIA based its valuation upon a lack of receipts and failed to use other established practices to value the remaining 2014 herd. No visual inspection of animals was carried out prior to destruction. Dr. Graham was also provided with the age and farm-source of all bulls purchased, as well as the velvet weights of bulls by age and with a five-year average of the number and size of bulls hunted each year.

CFIA also had in its possession the movement permits for all bulls transported and so knew how many hunt-ready bulls were moved to WHGR. Dr. Graham also knew that 55 bulls (i.e. 20% of the bulls purchased) had been culled. Yet these indicators were not taken into account in the valuation, and Dr. Graham based his valuation upon meat values. [ 64 ] CFIA’s own expert evaluator, Dr. Bischop, accepted that age is a major consideration in the evaluation process and produced an evaluation that came within 2 percent of the Appellant’s own evaluation. Yet Dr. Graham rejected Dr.

Bischop’s evaluation and did not allow sufficient age bands to fairly assess and differentiate values to take age into account. [ 65 ] Dr. Graham lacked the experience and industry knowledge to produce a fair and reasonable evaluation. For example, he was not aware that six years is an industry standard for the definition of a mature bull; he is not familiar with the basic anatomy of elk and how antlers grow and develop; and, he did not visually inspect the bulls that were destroyed. Dr. Bischop, on the other hand, did have

extensive experience working with cervids (particularly elk) and he had participated in up to fifteen assessments/depopulations. Yet his valuation was rejected by Dr. Graham. In fact, Dr. Graham devalued the evaluations of both experts by 49% without providing any reasonable rationale or evidentiary basis for doing so. [ 66 ] The Appellant has only been able to re-stock its bull herd to 42 percent of the 2014 capacity.

Bulls are available, but the compensation provided in this case was not sufficient to meet the market values for replacement bulls. [ 67 ] As regards the velvet aspects of the evaluation, the actual price of an elk velvet antler in 2014 was $40 per lb. Yet Dr. Graham used $34 per lb in his determination of current value, which resulted in an undervaluation for velvet in the amount of $24,000. B. Respondent [ 68 ] The Respondent argues that the Appellant was awarded a total of $476,343.00.

This amount was arrived at based on a number of considerations that included but were not limited to: replacement values, claims of genetic quality, age, restricted movement status and use of the animal. [ 69 ] The valuation of the elk included the consideration of the industry’s scoring system of the antlers – SCI.

The antlers had not yet grown in for the season at the time of the depopulation, so the SCI scoring system was of use in only a general way. [ 70 ] The valuation of the Appellant’s bull elk was further based on the consideration of relevant information provided by: the Appellant, the reports submitted to Dr. Graham, the Chair, and each of the expert evaluators.

Further information was obtained through the independent efforts of the Chair. [ 71 ] The valuation of the elk was further made difficult by the dearth of documentation provided by the Appellant that would have assisted in the determination process. [ 72 ] The compensation awarded to the Appellant was not unreasonable. Pursuant to s 51 of the Act , the Appellant received a total of $476,343.00 in compensation for the March 2014 depopulation of their bull elk.

The valuation of the Appellant’s bull elk was based on the replacement value, claims of genetic quality, age, restricted movement status and use of the animal. The Chair also took into consideration the relevant information provided by the Appellant, the reports submitted by each of the evaluators, the general application of the SCI scoring system and information obtained through the independent efforts of the Chair. [ 73 ] The Appellant has not shown that the compensation awarded was unreasonable.

The valuation of the elk and the compensation awarded was based on the information that was available and reflected the fair market value of the animals at the time of depopulation. X. EVIDENCE A. Appellant’s Witnesses Mr. Randy Wehrkamp – Highlights (

a) General [ 74 ] The principal witness for the Appellant was Mr. Randy Wehrkamp. Mr. Wehrkamp is the industry expert who participated in the evaluation process on behalf of the Appellant. He is also an elk farmer in his own right with his own farm at Tisdale. He has represented and been part of eight different elk compensation assessments, four of them prior to this one in 2014. (

b) The Elk Industry in Saskatchewan [ 75 ] Mr. Wehrkamp describes the elk industry in Saskatchewan as a relatively “new industry” that has been around for “20, 25 years in Saskatchewan and Canada.” It is different from other livestock sectors in several significant ways and CFIA, which has “expertise…in traditional market” does not understand the elk or cervid industry.

This hampers their ability to determine fair market value for destroyed elk. [ 76 ] He says that the “cervid industry acts on a private treaty sales basis only” and this creates a challenge for non-industry people because producers are secretive and don’t like to produce documentation about their businesses. [ 77 ] WHGR underwent a depopulation of their whole elk herd in 2009. This was a low point for the industry because it immediately followed the general depressed conditions of 2008.

Consumers were worried and “hunters from across the world weren’t traveling to Canada because the 2008 financial situation dictated that they stay at home. Their [i.e. the Appellant’s] markets were – their businesses were suffering.” [ 78 ] The elk industry has “three markets primarily,” which are meat, velvet and hunt.

Ninety percent “of the greater majority of producers who got into the elk industry got into the … started raising elk to grow bulls for the purpose of removing the antlers and selling what we refer to as velvet….Velvet simply refers to the outer covering on the antler.” [ 79 ] Meat production “in the case of the majority of farms in Saskatchewan, [is] simply the method that is used to cull animals from a herd.”

[ 80 ] As regards documentation, “most of the information that is required by CFIA is very difficult to extract from hard records. They’re just…they’re not there. The industry is too young.” [ 81 ] Velvet prices have increased significantly in recent years.

In 2009, velvet prices were “$7 to $8 a pound, maybe $10 if you were lucky.” “Velvet in 2014 sold for $40 to $45 per pound and it has gone up another 20 percent from 2014.” [ 82 ] Meat prices “have also gone up” in the same vein, increasing by 50 percent during the four year period prior to the WHGR depopulation in 2014: “In 2014 meat was selling as high as $3.90 a pound….” [ 83 ] 2014 was a good year for the elk industry: “We were in an upturn.

We had four years of continued increased value for all of our products, including hunt bulls were going up in value.” [ 84 ] Hunt bulls are particularly valuable because they are used for breeding and are then sold as part of the hunt operation.

Prices for young bulls “tend to be lower than prices for mature bulls.” This is because “Buying top end young bulls for breeding purposes allows you the opportunity to use that animal as a breading bull and then, value added, if you wish, into the hunt operation.” Also, in the elk industry “bulls at a younger age grow bigger antlers as they get older, and their value increases. That is one of the unique aspects of this industry that we struggle to…to educate folks to.” (

c) The Nature of the Appellant’s Elk Business [ 85 ] One of the concerns that arises from the hearing of this matter is that no one who either owns WHGR or works directly with the business was called as a witness by the Appellant. This creates problems for the Court as an Assessor. Although this is not a formal Court proceeding, the problems associated with hearsay evidence still exist. Because it is second-hand and the source does not provide it under oath, it cannot be fully tested. On many matters before me, Mr. Wehrkamp was able to provide direct evidence because he was part of the evaluation process.

But in other areas (the WHGR farm background, for instance), he could only tell me what he has been told by those who own and work on WHGR, who are not under oath so their information cannot be tested. This issue should be kept in mind by any producer who appeals an evaluation. In the present case, it is not particularly problematic. According to Mr. Wehrkamp, however, no one in the elk industry likes to produce information. But without relevant information, no assessment is possible.

If elk producers wish to make claims on the public purse for compensation then they have to realize that, unlike the private elk industry (according to Mr. Wehrkamp), complete transparency is a fundamental requirement. Producers cannot have it both ways. The Common Procedures Manual makes this very clear. Any producer who thinks they can make a claim on the public purse without providing CFIA what it needs to verify the amount of the claim is simply being naïve.

The same applies when appeals are made. [ 86 ] Hearsay evidence is not automatically inadmissible, but I am uncomfortable with the fact that WHGR has not provided direct evidence on background aspects of its business that could have been tested by cross-examination. No explanation was offered for not calling direct evidence on some points. On the other hand, most of what Mr. Wehrkamp has to say about WHGR’s business was not questioned by CFIA and no objections were raised on hearsay matters. I am assuming, then, that Mr. Wehrkamp’s evidence on this appeal is not controversial in any material respect. [ 87 ] Mr.

Wehrkamp testified that WHGR “is one of the largest and most established farms in this industry.” [ 88 ] He also says that: Early in their history and establishment of the farm, they made the decision to … to expand from a simple raising of animals to a hunt operation, providing hunting experiences for hunters from all over the world to travel, for the opportunity to hunt tremendous trophy animals on a hunt property that is not only stunningly beautiful but is large and is recognized internationally as one of the premium hunting grounds in Western Canada. [ 89 ] As a consequence, WHGR “has long been known as a producer of tremendous genetics going back 20 years to when there was a boom…in the elk industry,” and “it was to their advantage to produce large bulls that they would then move…to their hunt areas.” [ 90 ] In 2009, as a result of a CWD identification, WHGR’s “entire herd was destroyed.” Compensation discussions went well and “compensation was paid in the neighbourhood of $5,300 … for the hunt bulls on average for 102 bulls.” WHGR regarded this as fair compensation. [ 91 ] The primary business of WHGR is the hunt business, although it does sell velvet, and also sells meat from those animals that are part of the annual cull. [ 92 ] In 2013, WHGR had $91,000 in meat sales, $120,000 in velvet sales, and $275,000 in hunt sales.

So primarily, Mr. Wehrkamp says, it is a hunt business. [ 93 ] CFIA agreed that the average total hunt sales for the five years preceding 2014 was 31 hunts. [ 94 ] Mr. Wehrkamp described how hunt sales are handled through a broker. WHGR agrees to provide a bull through the broker. The money is all through the broker. The hunter hunts the bull and pays the broker.

At the end of the season – or at intervals – the broker sends a cheque to WHGR but “it doesn’t specify the - - traditionally the broker is under no obligation to provide this level of detail to the hunt farm.” [ 95 ] Meat production is “simply the method that is used to cull animals from the herd.” [ 96 ] Mr. Wehrkamp says that, based on the revenue generated, it is clear that WHGR “is not a meat farm. It is a hunt farm.

It is a velvet farm, and the meat process is used to cull surplus animals and animals of lesser quality.” [ 97 ] Following the 2009 depopulation, WHGR was forced to source animals from a variety of farms. They could not get all

animals from a common farm and so, “in an effort to move forward as quickly as they could to restock and get the herd numbers back up, they purchased animals over a period of years from a variety of farms.” [ 98 ] The animals were “block-purchased mainly from producers who were distressed, who were - - had large numbers of animals that wanted to… sell animals.” [ 99 ] WHGR purchased 17 elk bulls on April 3, 2014 during the evaluation proceedings and provided receipts because “by this time, it was painfully obvious that the only consideration that CFIA was prepared to make was consideration for meat sales.” These bulls were purchased “at $4,264 a piece” and there were twelve 2007 bulls, which would make them 7-years-old in 2014. [ 100 ] Mr.

Wehrkamp says that the culling process used at WHGR was of extreme importance in increasing the value of the animals acquired after the 2009 depopulation. This means that “of the animals that were accumulated from the period of the depopulation…2009 to 2013, 15 percent of those animals were culled as low producers and animals that did not meet the needs of the farm.

Quite simply put, the animals that remain then have greater value than the original herd….” [ 101 ] Apart from the 901W Stinson bull, and the 17 elk bulls purchased in 2014, WHGR would not provide CFIA with purchase receipts from the animals purchased after 2009 because, in WHGR’s view, those receipts were irrelevant to the 2014 evaluation because of the annual culling process. However, Mr. Wehrkamp confirms his understanding that these animals were purchased by WHGR “for close to meat prices.” [ 102 ] WHGR was compensated for 266 bulls in total. [ 103 ] Mr.

Wehrkamp says that WHGR “probably …may have” received receipts for the animals that were purchased. [ 104 ] WHGR had receipts from velvet sales but did not provide them. [ 105 ] Mr. Wehrkamp emphasizes that a purchase receipt for a block-purchase “does not by itself have any indication…of whether the bull is a meat bull, a hunt bull or velvet bull. It’s impossible to determine” : These bulls were bought without antlers on their head, and when you buy a block of animals…you are going to have some poor bulls, you’ll have some average bulls and you’ll have some superior bulls.

The information - - to provide a purchase receipt that cannot substantiate what is being requested is a fool’s business. [ 106 ] A receipt for a block-purchase “shows an average price, a block price, and therefore it’s irrelevant to the discussion of what the bull is worth two and three years after the animal’s been on the farm…and… as the bull ages, their value increases. What value does that receipt have?” (

d) The Evaluation Process [ 107 ] Mr. Wehrkamp says that CFIA failed to understand that WHGR is a hunt/velvet business and not a meat business. [ 108 ] The initial meeting involving Mr. Brown and Mr. Conacher, as owners, Mr. Wehrkamp, Dr. Bischop as the CFIA expert, and Dr. Graham (who chaired the evaluation process) took place on March 5, 2014. Mr. Wehrkamp describes that meeting as follows: MR.

WEHRKAMP: Somewhere along the way, personnel changed, and really that’s the only thing that we can identify, personnel changed, and at the March 5th meeting, we went into the meeting with the expectation that this is what we would be doing. We would be sitting down, discussing, presenting. Mr. Brown had just returned from a holiday 48 hours before, but we still went ahead with the meeting because we felt at that point there was an opportunity to get the process started. We were going to provide information.

We were going to discuss, and similar to the 2009 case, it would be resolved fairly quickly and we would move on. Much to our surprise and greater disappointment, that isn’t what happened. The March 5th meeting was an exercise in frustration for the producers. Dr. Graham frankly seemed disengaged. We presented him with questions. We asked him particular pieces of information. Did he understand the elk industry? No, he did not. He readily admitted he did not understand the elk industry. We asked him, Do you understand how antlers are scored and how they’re graded?

Are you familiar with the competition processes that occur that help dictate that? No, he didn’t understand that. Do you understand genetics? Well, yeah, he understood genetics because he’s a cattleman. Well, that was a start. Well, did you understand the elk genetics? Can you tell us some of the better bulls? Can you tell us some of the producers that - - that produce superior animals? Well, not really. He identified myself as one, I believe, but when we - - he was unable to really identify any producers.

He was unable to demonstrate any knowledge frankly of the industry other than the fact that he was a CFIA vet and had worked for CFIA for a number of years and had been involved with some elk farms. It was very disappointing for us, very disappointing. Dr. Bischop, who was CFIA’s expert, was much more engaged. He asked questions. In fact, when we were looking at the value of animals, one of the key points that we made was a two-year-old bull is worth less than a three-year-old bull. A four-year-old is worth more than a three-old-bull.

A five-year-old bull is worth more than a four-year-old bull and so on until you reach about the age of six. At the age of six, these bulls are kind of - - some get a little bit bigger, but they’re kind of what they’re going to be. You know pretty close to what they’re going to be. (Transcript of hearing, pp 50-52) [ 109 ] Mr. Wehrkamp took his initial hand-written report to the meeting of March 5, 2014 for discussions purposes. This is how he describes the reaction: MR. WEHRKAMP: We readily admit and agreed with CFIA that not all elk are created equal.

Some are great bulls, some are poor bulls, and there is a reasonableness applied to genetics for those that understand livestock reproductivity - - reproduction and also the

transference of the genetic ability to grow antlers similar to beef in what an animal can be expected out of certain bloodlines. There are no guarantees. That’s why you have a cull program to go with it because you purchase a block of animals. You cull off your bottom percent. So we grouped the animals originally, and we said these farms where these animals were sourced and we show three, Friedel, Lost Trail and Slade. JUSTICE: But there were other farms. There weren’t just three farms. MR.

WEHRKAMP: That’s right, and then we showed the medium-productivity farms, McAllister, Tambelini and Hope, and average productivity, Cool, Simon, Dixon and Perkins. JUSTICE: So that’s the - - that’s the whole group of farms there. MR. WEHRKAMP: That’s correct, Sir. JUSTICE: Okay. All right. MR. WEHRKAMP: At least the - - the absolute majority of the animals are identified from those farms. There are a few other individual animals that were purchased, but these are the animals that were purchased in block and are - - that we’re dealing with here.

So we grouped the farms that way, and then what we did is we said, okay, well, what could we expect from the animals? So we put a value on the different categories on the high, medium and average productivity, so we put a value on those, and then we also said, well, you know, at what point - - this is a hunt business, so at what point do bulls become hunt bulls? On average what is reasonable to expect? Well, we know that the antler competitions basically say animals six years of age, older are considered mature, so this is not a farm opinion. This is not an industry expert opinion.

It is a well-documented case and situation of information that industry has said - - states that after that age, these bulls are mature. There is no competition by age. It doesn’t matter if your bull is 7 or 12. They all are of the same category. JUSTICE: And was that cutoff accepted by CFIA? MR. WEHRKAMP: Dr. Bischop felt it made good sense. We - - to our understanding absolutely that was agreed to by Dr. Bischop. Dr. Graham, in fairness, did not agree. He was in - - passive. He just really didn’t say very much and didn’t want to discuss any aspect of the valuation, but Dr.

Bischop, who was their industry expert, agreed at some point you have to say there’s a cutoff. He said - - and choose ( sic ) the age, but industry’s already acknowledged that at that age moving forward, those bulls are considered mature, and they are then able and reasonably would be put into the hunt area and they would be hunted. Not all would necessarily go in there, but basically that’s what happens is that these bulls are now considered mature and they are considered hunt bulls. There was agreement. Dr.

Bischop agreed. (Transcript of hearing, pp 53-55) [ 110 ] There were many email exchanges and follow-up discussions after March 5, 2014, and Mr. Wehrkamp produced his final report of March 10, 2014 which recommended a total compensation figure of $1,106,101.00. [ 111 ] Throughout the process, Mr. Wehrkamp says that Dr. Graham repeatedly asked for receipts for the block-purchased animals but none were provided because WHGR considered them to be irrelevant. [ 112 ] In the absence of receipts, WHGR continued to provide information to CFIA which they thought was relevant. [ 113 ] Dr.

Bischop produced his expert report of March 26, 2014, which identified a total figure close to Mr. Wehrkamp’s. [ 114 ] Dr. Graham rejected both expert evaluations and produced his own evaluation of $476,343.00 in his Valuation Report of May 2, 2014. Dr. Graham’s recommendation was reviewed within CFIA and accepted by the Minister. [ 115 ] In response to Dr. Graham’s report, Mr.

Wehrkamp pointed out to CFIA that: CFIA has chosen to disregard the work of their industry expert, ignore a generally agreed to process on valuing the hunt bulls, failed to respond to reasonable questions, and have made numerous errors that were identified by WHGF in the CFIA assessment…. The Valuation used by CFIA appears to be based on “because I can” rather than salient facts and information. It was obvious throughout the process that Dr. Graham did not understand the hunt industry and operation of WHGF.

On different occasions he stated “I don’t understand why…” and rather than defer to one of the industry experts available to him for a response he has chosen his own conclusions, unfounded as they may be. [ 116 ] This did not change the Minister’s mind. (

e) Problems with the CFIA Evaluation [ 117 ] Mr. Wehrkamp’s evidence on the evaluation done by Dr. Graham is that the process was flawed so that CFIA undercompensated WHGR in excess of $500,000.00. [ 118 ] He says that Dr. Graham made the mistake of treating WHGR as a meat farm, when it primarily is a hunt business. [ 119 ] Dr. Graham agreed that 31 hunts on average were sold in the 5 years prior to 2014: “So 31 hunts were agreed to as the ranch number of hunts that were sold on an annual basis.” And the prices were in U.S. dollars. The figures show that “the hunt operation provides substantial income to the farm greatly exceeding the value of the meat.”

[ 120 ] WHGR readily “agreed with CFIA that not all elk are created equal. Some are great bulls, some are poor bulls…. There are no guarantees. That is why you have a cull program to go with it because you purchase a block of animals. You cull of the bottom 10 percent.” [ 121 ] However, Mr.

Wehrkamp says “there is a reasonableness applied to genetics for those that understand livestock reproductivity - - reproduction and also the transference of the genetic ability to grow antlers similar to beef in what an animal can be expected out of certain bloodlines.” [ 122 ] Following the 2009 depopulation, WHGR purchased blocks of bulls from different farms and went through the culling process.

For purposes of the evaluation, WHGR grouped animals according to source and then indicated which of the source farms were known for their “high productivity,” “medium productivity,” and “average productivity.” [ 123 ] WHGR grouped the farms and then “we said, okay, well, what could we expect from the animals? So we put a value on the different categories on the high, medium and average productivity… and then we also said, well, you know, at what point - - this is a hunt business, so at what point do bulls become hunt bulls?” : On average what is reasonable to expect?

Well, we know that the antler competitions basically say animals six years of age, older are considered mature, so this is not a farm opinion. This is not an industry expert opinion. It is a well-documented case and situation of information that industry has said - - states that after that age, these bulls are mature… [ 124 ] Mr. Wehrkamp says that the six-year cut-off was accepted by Dr. Bischop, but not Dr. Graham, at the March 5, 2014 meeting: Dr. Bischop felt it made good sense. We - - to our understanding absolutely that was agreed to by Dr. Bischop. Dr. Graham, in fairness, did not agree.

He was in - - passive. He just really didn’t say very much and didn’t want to discuss any aspect of the valuation, but Dr. Bischop, who was their industry expert, agreed at some point you have to say there’s a cutoff. He said - - and choose ( sic ) the age, but industry’s already acknowledged that at that age moving forward, those bulls are considered mature, and they are then able and reasonably would be put into the hunt area and they would be hunted. Not all would necessarily go in there, but basically that’s what happens is that these bulls are now considered mature and they are considered hunt bulls.

There was agreement. Dr. Bischop agreed. [ 125 ] Mr. Wehrkamp says that Dr. Graham’s failure to accept this age classification is a major problem with his evaluation: One of the key elements and one of the key issues we have with the CFIA evaluation is the fact that Dr. Graham did not accurately break the animal groups down sufficiently to demonstrate the value of the bull by age, and that’s documented in - - in his report…. [ 126 ] Other “key issues” put forward by WHGR for valuation purposes were: a. What the market was doing; b. Velvet production as an indicator of genetic quality; and c.

Information from a variety of producers as to what amount they would sell animals for based on the age of the animal. [ 127 ] Mr. Wehrkamp says that all of this information was ignored by CFIA: MR. WEHRKAMP: …To our - - from our perspective, these were completely ignored by the Canadian Food Inspection Agency. No consideration at all was given to this. They were completely disregarded. In fact, in the e-mail by Ken Schmidt in - - to Dr. Graham - - and I can pull that one fairly quickly for you, and that would be in

section 122 of Ms. Bird’s documents. He talks about discounting - - discounting the report because no receipts had been provided. Pardon me. I think 118 is actually the - - that particular e-mail, and interestingly enough, there’s a handwritten note, and I can’t tell who it’s written by, but it says, No receipts were provided. That’s not correct. Receipts were provided. Price lists were provided by the producer, and, in fact, Canadian Food Inspection Agency provided price lists too, but they provided -- oh, wait a minute, there was no price lists that were provided.

What they provided was a statement from one farm who operates a hunt operation in the eastern part of Saskatchewan. We didn’t see any - - we requested information. We requested documentation. We didn’t see any documentation that supports that particular statement. What document has less value from our perspective than providing the actual receipts that we provided and the actual price list of animals that are for sale. In fact, the second - - CFIA provided two references of farms to support their case of what the valuation is. One was Darcy Lepowick, and that’s referenced in here, in the documents.

The second was a reference to the Karakachuk farm at Yorkton that has not sold animals for three years, nor have they purchased animals for three years. JUSTICE: At that time. MR. WEHRKAMP: At that time, correct. So I’m - - JUSTICE: Which farm was that? MR. WEHRKAMP: The Karakachuk farm, Don Karakachuk farm at Yorkton. I’m curious to how CFIA can use a farm that has not purchased animals or sold animals as a reference point… (Transcript of hearing, pp 61-62) [ 128 ] WHGR also provided information on replacement animals that they purchased at the material time in 2014: MR.

WEHRKAMP: The other - -the other aspect or - - and I think in determining fair market value and what we - - what that means because it really means - - fair market value really means what is the replacement cost of this animal, correct? In March of 2014, I would like the Court to understand that bulls are not for sale because they are growing a new set of antlers. You can’t move them without damaging the antlers and severely injuring the bull, so it’s very difficult to buy bulls at that point in the year because normally people

would, if they’re going to grow them into the hunt market, would want to grow the full set of antlers. If they’re going to sell them as commercial bulls, if you wish, for a velvet herd or something in that vein, they would normally wait until May, June when the antlers are removed and then sell what we refer to in the industry as slicks, meaning the antlers have been removed from the bulls and they are - - they don’t have antlers. They just have little buttons on their heads.

We pushed and looked, and by we, I mean Willow Hollow Game Ranch did, to find animals that they could purchase during that period of time that were of like quality. They found one group of animals at Manfred Klettberg farm, and that is shown as an actual receipt, and that would be in your tab number -- JUSTICE: Sorry, I didn’t catch the number. MR. WEHRKAMP: I’ll give you the number. JUSTICE: Oh, okay. MR. WEHRKAMP: Well, actually it’s in a couple different places, but it’s actually in tab number 119 of Ms. Bird’s, the Respondent’s documentation. So certainly feel free to use that. JUSTICE: Klettberg. Okay. Yes.

MR. WEHRKAMP: Willow Hollow purchased 17 elk bulls on April 3rd, 2014, during the period of negotiations because by this time, it was painfully obvious that the only consideration that CFIA was prepared to make was consideration for meat animals. They seemed to have disregarded all of the documentation that we had provided, all of the industry information that we provided, and they were solely focused on meat. Well, we’re going to pay you meat price unless you can show us that they’re worth more money. How do we show you they’re worth money? Well, you have to have receipts.

Well, that’s fair, we don’t have any issue with that. What is fair market value? Well, fair market value is what it would cost to replace that bull and that particular group of bulls. How do we do that? You have to buy bulls. You have to have an actual sale to actually demonstrate fair market value, understanding that bulls are not for sale during those months of - - unless you want to pay ridiculous, unfair, unreasonable amounts of money, you don’t buy those bulls at that period of time.

Willow Hollow searched out and was able to search out one small group of bulls, 17 elk bulls that they purchased but did not pick up until after they were velveted at $4,264 apiece, and you’ll see in there that by age, there were 12 2007 bulls, which would make those -- well, 2014 those would be seven-year-old bulls. JUSTICE: And - - sorry, and what was - - what was the average price that you just gave me? MR. WEHRKAMP: $4,264. So that being the case, is that not - - and our contention is is that not a reasonable and the most accurate way of determining market value by purchasing a bull?

So we have - - the producers provided estimates from a number of farms. They provided one actual receipt of what it’s going to cost to replace part of their herd, but that seems to be ignored in the entire exercise. In fact, I don’t think I could find a reference to Dr. - - to the Klettberg receipt anywhere, and there may be. There’s a tremendous amount of information here, but if it was, there was certainly no consideration. It seemed to be ignored. (Transcript of hearing, pp 64-66) [ 129 ] Information on the elk market was also provided to CFIA: MR.

WEHRKAMP: Velvet price is tripling - - or not tripling, up 120 percent. Meat price is up that. That’s done nothing but affect the price of replacement stock. In 2014 the industry was excited. We were on an upturn. We had four years of continued increased value for all of our products including hunt bulls were going up in value. We sell hunt bulls. Our operation sells hunt bulls. We’ve given you receipts. We’ve shown values, and we’ve made it clear - - and I’ll state it again values are up 15 to 20 percent from 2013, and this is a 2014 exercise.

These bulls were being replaced not in the 2013 market but in the 2014 market. We shared information - - and we’ll talk - - again provide a witness that will substantiate. We shared information with CFIA and told them the projections for 2014 are 40 plus dollars per pound for velvet. That means the price is going to go up for your animals. That means that the price is higher. That means that your compensation needs to reflect it, and yet there seemed to be little, if any, consideration given to that.

We have an up market. (Transcript of hearing, p 69) [ 130 ] Of central concern when it comes to the CFIA evaluation was Dr. Graham’s failure to take into account the culling process that enhanced the value of animals that had been acquired through block-purchases: MR. WEHRKAMP: The CFIA, when assessing the value of the herd, looked at the culled animals that were culled in 2013, and there’s a record of all of the movement permits that were specific to that. Pardon me. I’ll shut this off.

Section 11 in my notes is basically the 2002 - - 213 to 215 AWAPCO reports, which is the new generation co-op where the elk were slaughtered. I think it’s extremely important for the Court to understand and it was equally important for CFIA to understand, although they’ve refused to acknowledge it, was that of the animals that were accumulated from the period of the depop. in 2000 - - or—2009 to 2013, 15 percent of·those animals were culled as low producers and animals that did not meet the needs of the farm.

Quite simply put, the animals that remain then have greater value than the original herd, and just as - - as an example for the Court, the example, if you buy 100 animals, there are some good ones, most of them are average, and there’s some great ones, and if you pay $1,000 apiece for them, for the purposes of the argument, and you sell the bottom poor ones, you bought them at a package price. JUSTICE: Yes, the block purchase. MR. WEHRKAMP: The block purchase, and this is - - this is the contention and part of the reason why Willow Hollow game farm did

not want to provide purchase receipts because CFIA does not recognize and would not recognize in our discussions any consideration for culling. In fact, the note that I referenced earlier clearly states by CFIA that they refused to recognize the culling concept as an increased value for the remaining animals. It is beyond ridiculous, that statement frankly, because it is a common practice and a necessary practice in the livestock sector.

So the bottom animals had already been culled from the herd when CFIA applied their valuation and looked at the culled animals and said, well, you’re selling animals for meat, so therefore you’re a meat farm, when, in fact, what the farm was doing was moving to increase the value of the animals on the farm. It’s logical. It’s common sense. It’s tragic that that wasn’t acknowledged. (Transcript of hearing, pp 72-74) [ 131 ]

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