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

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......................................................................................................................... 3

II. INTRODUCTION .................................................................................................................. 4

III.

IV.

ROLE OF THE COURT..................................................................................................... 6

BACKGROUND ................................................................................................................ 7

A. Overview............................................................................................................................. 7

Page: 2

B. The Facts............................................................................................................................. 8

V. DECISION UNDER APPEAL ............................................................................................. 11

VI.

LEGAL FRAMEWORK .................................................................................................. 13

A. The Legislation ................................................................................................................. 13

B. The Common Procedures Manual .................................................................................... 19

VII. THE ISSUE....................................................................................................................... 25

VIII. MR. WEHRKAMP’S ROLE ............................................................................................ 25

IX.

ARGUMENTS.................................................................................................................. 27

A. Appellant........................................................................................................................... 27

B. Respondent........................................................................................................................ 30

X. EVIDENCE........................................................................................................................... 32

A. Appellant’s Witnesses....................................................................................................... 32

Mr. Randy Wehrkamp – Highlights...................................................................................... 32

(a) General.................................................................................................................... 32

(b) The Elk Industry in Saskatchewan.......................................................................... 32

(c) The Nature of the Appellant’s Elk Business........................................................... 34

(d) The Evaluation Process........................................................................................... 39

(e) Problems with the CFIA Evaluation ....................................................................... 43

Mr. Blaine Weber – Highlights............................................................................................. 60

(a) Background and Experience ................................................................................... 60

(b) Market Information................................................................................................. 61

Mr. Terry Moorman – Highlights ......................................................................................... 66

(a) Experience............................................................................................................... 66

Page: 3

(b) Depopulation........................................................................................................... 67

(c) Age and Value......................................................................................................... 70

B. Respondent’s Witnesses.................................................................................................... 71

Dr. Graham’s Evidence – Highlights.................................................................................... 71

(a) Background and Experience ................................................................................... 71

(b) The WHGR Evaluation........................................................................................... 72

Dr. Bischop’s Evidence – Highlights.................................................................................. 122

(a) Background and Experience ................................................................................. 122

(b) The WHGR Evaluation......................................................................................... 124

XI.

ANALYSIS..................................................................................................................... 135

XII. EVALUATION............................................................................................................... 179

XIII. COSTS............................................................................................................................ 180

Schedule “A”............................................................................................................................... 190

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.

Page: 4

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.

Page: 5

[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

Page: 6

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.

Page: 7

[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.

Page: 8

[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

Page: 9

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.

Page: 10

[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

Page: 11

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:

Page: 12

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.)

Page: 13

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.

A.

LEGAL FRAMEWORK

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.

Page: 14

[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

56 (1) Il peut être interjeté

appel devant l’évaluateur soit

dissatisfied with the Minister’s pour refus injustifié

disposition of the claim may

d’indemnisation, soit pour

bring an appeal to the

insuffisance de l’indemnité

Assessor, but the only grounds accordée.

of appeal are that the failure to

award compensation was

unreasonable or that the

amount awarded was

unreasonable.

…

[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

Page: 15

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,

48 (1) Le ministre peut prendre

toute mesure de disposition,

Page: 16

or require its owner or any

person having the possession,

care or control of it to dispose

notamment de destruction, —

ou ordonner à leur propriétaire,

ou à la personne qui en a la

of it, where the animal or thing 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 b) soit ont été en contact avec

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

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,

c) soit sont des substances

a vector, the causative agent of toxiques, des vecteurs ou des

a disease or a toxic substance.

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 51 (1) Le ministre peut

compensation to be paid from

ordonner le versement, sur le

the Consolidated Revenue

Trésor, d’une indemnité au

Fund to the owner of an animal propriétaire de l’animal :

that is

(a) destroyed under this Act or a) soit détruit au titre de la

is required by an inspector or

officer to be destroyed under

this Act and dies after the

requirement is imposed but

before being destroyed;

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

b) blessé au cours d’un examen

ou d’une séance de traitement

identified under this Act by an ou d’identification effectués,

Page: 17

inspector or officer and dies, or au même titre, par un

is required to be destroyed, as

inspecteur ou un agent

a result of the injury; or

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

(2) Sous réserve des

paragraphes (3) et (4),

compensation shall be

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.

(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.

(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

(4) L’indemnisation s’étend en

outre, lorsque les règlements le

(2), compensation may include prévoient, aux frais de

such costs related to the

disposition, y compris de

disposal of the animal as are

permitted by the regulations.

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

2 Pour l’application du

subsection 51(3) of the Act,

paragraphe 51(3) de la Loi, la

the amount that is established

valeur marchande d’un animal

Page: 18

as the maximum amount with

respect to an animal that is

destroyed or required to be

qui est détruit ou qui doit l’être

en application du paragraphe

48(1) de la Loi ne peut

destroyed under subsection 48( dépasser :

I ) of the Act is

(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

57 (1) L’évaluateur qui entend

l’appel peut confirmer ou

modifier la décision du

Page: 19

of the claim or refer the matter ministre ou renvoyer l’affaire à

back to the Minister for such

further action as the assessor

may direct.

celui-ci pour qu’il y soit donné

suite de la manière que lui-

même précise.

(2) Costs may be awarded to or (2) Les frais peuvent être

against the Minister in an

appeal.

accordés au ministre ou mis à

sa charge.

(3) The decision of the

(3) Les décisions de

Assessor on an appeal is final

l’évaluateur ne sont pas

and conclusive and not subject susceptibles d’appel ou de

to appeal to or review by any

Court.

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.”

Page: 20

[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

Page: 21

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

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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;

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• 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,

Page: 24

◦ 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

Page: 25

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

Page: 26

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

Page: 27

provides an objective evidentiary basis for the severe criticism levelled against CFIA, and

Dr. Graham in particular.

IX.

A.

ARGUMENTS

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.

Page: 28

[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

Page: 29

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

Page: 30

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.

Page: 31

[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.

Page: 32

X.

A.

EVIDENCE

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.

Page: 33

[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.”

Page: 34

[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

Page: 35

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:

Page: 36

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.

Page: 37

[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

Page: 38

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.

Page: 39

[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

Page: 40

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

Page: 41

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:

farms.

But there were other farms. There weren’t just three

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:

there.

So that’s the - - that’s the whole group of farms

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

Page: 42

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.

Page: 43

[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.”

Page: 44

[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…

Page: 45

[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

Page: 46

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:

MR. WEHRKAMP: At that time, correct. So I’m - -

JUSTICE: Which farm was that?

At that time.

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

Page: 47

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:

MR. WEHRKAMP: I’ll give you the number.

JUSTICE: Oh, okay.

Sorry, I didn’t catch the number.

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.

Page: 48

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)

Page: 49

[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)

Page: 50

[131] Mr. Wehrkamp says that even on the basis of meat evaluation, Dr. Graham was not

accurate:

MR. WEHRKAMP: … there’s notes in there of - - from Dr.

Graham, well, we decided to value - - well, it’s about 200 animals,

and we’re going to do about $7 per kilogram. Neither number is

accurate. It wasn’t about 200 animals. There was a fixed number of

animals that we were valuing, and it wasn’t about $7 that was the

starting point for compensation. The market price, which is

common knowledge and researched by CFIA, was $7.15 cents a

kilogram, and yet the complete lack of attention to detail frankly is

insulting to the producer. That CFIA would have the disregard to

not even take the time to use accurate information is hurtful as well

as inaccurate and does nothing to do - - to lend any level of

confidence to the fact of CFIA’s ability to fairly assess and

determine value.

(Transcript of hearing, pp 74-75)

[132] Mr. Wehrkamp goes into significant detail as to how bulls should be valued and contrasts

this with Dr. Graham’s approach:

MR. WEHRKAMP: I’ve already talked about the handwritten

presentation. That was completed in a matter of just a very short

time because again, folks were just returning from vacation and

there was a great desire to get the process started. We talked in that

report about genetics, and we’ve talked about the importance of

genetics. We’ve talked about the importance of everyone on the - -

understanding genetics, and we’ve talked about understanding

what average numbers are and what product - - what production is

and where farms rate on their ability to produce velvet, which is an

indicator but not a conclusive indicator or a single indicator of the

bull’s ability to grow antler for the hunt market. They are two

different markets.

We submitted a second report which talks about other issues that

we had during the - - during the March 5th meeting, Dr. Graham

continually asking why would anybody pay $8,000 for a young

bull.

JUSTICE:

Which tab are you looking at now?

MR. WEHRKAMP: Tab 6, please.

Page: 51

JUSTICE:

Tab 6. Okay.

MR. WEHRKAMP: The first page, third paragraph: (as read)

We are particularly distressed over Dr. Graham’s

continued reference to higher prices paid for

breeding elk of quality. He repeatedly asked, Why

would anyone pay $8,000 plus for younger bulls.

The answer is simple economics. These bulls are then used for

breeding and then resold into their hunt operation or moved into

the hunt operation at significantly increased prices. The receipts

that are provided by myself will clearly indicate that prices for

younger bulls tend to be lower than prices for mature bulls. It

makes some sense. Buying top-end young bulls for breeding

purposes allows you the opportunity to use that animal as a

breeding bull and then value added, if you wish, into the hunt

operation. It’s good management practices, and yet the people who

are sitting as our assessors and making the determination are

unable to understand that particular concept.

This is not the cattle industry. You buy a bull for - - for the - - to

use in the beef industry, he serves a single purpose in life,

breeding. He is then slaughtered. His value decreases as he gets

older. In the elk business, bulls at a young 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 with.

So looking, then, at continuing on in that section, I just want to

spend a bit of time on - - we extracted velvet weights on bulls.

We’ve moved onto the next page, the first chart entitled Willow

Hollow Game Farm 2013 Velvet Records. We’ve shown the

average velvet weights as best we could determine or as best as

Willow Hollow could determine from their records. It’s the only

place this information is available. You’ll see that five-year-olds,

four-year-olds, three-year-olds are indicated by pounds. Two-year-

olds were hard antlers, which is not an uncommon practice. Young

bulls are often left in hard antler to see an antler design and what

they might look like ‘cause the bulls grow a like design - • they get

bigger, but the design of the antler remains fairly consistent as they

age. So no two-year-olds were velveted in 2000 - - in 2013.

Industry average. This is, from our perspective, a best guess

because that information is not readily available. It is based on

conversations with other producers, industry knowledge and that’s

really all we can provide you. We can’t provide you with a list of

Page: 52

100 producers. That information is proprietary. They will not

release it, so that is our best guess. We tried to then show you what

we felt was a reasonable difference in the farm’s weighted average

versus industry averages and what that meant compared to the

industry. We’ll be the first to admit to there’s some variance here

because it’s a non-substantiated number, so we can move the

numbers around a little bit, but the point being that at the very

least, the Willow Hollow game animals were producing average-

plus pounds per animal.

The second page is titled Mature Bull Valuation Part 1. So what

we did is we thought we had agreement with Dr. Bischop that six

years was the cut line for mature bulls, and what we did then is we

went back into the records of Willow Hollow and said, okay, of the

31 hunts more or less that you are selling on an annualized basis - -

and let’s remember that in 2009 they had hundreds of bulls on the

farm and they were rebuilding a relatively young herd, so they’re

recovering from a low economic period. They have a young herd

of animals. It would be and seems to me to be somewhat

unreasonable - - and reasonableness being the key issue here. It is

somewhat unreasonable to assume that Willow Hollow would have

a maximum number of hunts from 2010 to 2013 given that their

farm was depopulated in 2009, but, again, CFIA chose in their

wisdom to apply that average for that period of time.

So what we did is we said, okay, of the hunts that you sold, how

many and what percentage of the hunts were within what category

or what size. So you’ll see the category. Now, that means 450

inches is the score of the bull, 440 to 449 and so on and so forth.

So the number of bulls, what we did, if you went over to the third

column, on the five year average these are the percentages or

number of hunts that would have occurred on Willow Hollow

game farm for that period of time. We then applied to the number

of bulls that were involved in this category - - 151 of them, we

applied that percentage to determine how many hunts, moving

forward from that group of bulls, would be sold within each

category, and then we placed a value on those bulls and came up

with a replacement cost.

Instead CFIA said, well, you sold 31 hunts so we’re going to give

you hunt value for 31 bulls. Well, that could be, I guess, for 2014.

What about 2015 and ‘16? What about all the mature bulls that had

already been culled to have the top bulls on the farm that were

slaughtered? What is the replacement value for them? This is a

five-year moving-forward number. If there’s 150 bulls and if you

assume, then, that Dr. Graham’s numbers of 31 bulls per year are -

Page: 53

- is going to be the move-forward number of hunts, that would be

the next five years of hunts.

The bulls were on the farm ready to be hunted. We applied

reasonableness in the determination of what percentage of bulls

fall into which category and valued accordingly. It’s a reasonable

approach. It’s fair, and it provided at least a reference point instead

of saying you have 150 bulls but only 30 of them are hunt bulls.

How do you know and how can CFIA substantiate that? They

can’t, and frankly there needs to be a formula applied and a

reasonableness to that structure that would allow for that to occur.

We believe this was an excellent example.

We then went through and we listed the other bulls by age on that

page, and in the Part 2, we applied a discounted value from our

earlier valuation to the bulls to determine what, in fact, this group

of bulls would be valued at. You add the two numbers together,

and you get what we - -what was the requested compensation, 1.1

million dollars and change.

There is structure to this process. There is reasonableness to this

process. It is a defendable process. It is supported with would be.

There is an actual receipt of what a block of bulls were purchased

for, and, for the record, of those 17 bulls purchased from Klettberg,

some of those have been culled. It is a reasonable process to arrive

at.

The final page basically shows three different farms, price list

valuations, and you’ll see Iron River, Bruce Friedel. Bruce Friedel

is recognized - - and CFIA would probably, I hope, agree with this,

that Bruce Friedel is an industry leader and has some of the best

bulls in the world. We removed -- he wouldn’t provide· his price

list, and, in fairness, that group of bulls may have been superior, so

we took them out completely. We averaged the prices to determine

what, in fact, would be the prices that we used to determine fair

market value. I see nothing of that that can even come close from

the efforts put forward by CFIA to substantiate their numbers. This

was a reasonable process. It was a fair process. It was discounted

from the original proposal and ignored.

The entire report that Dr. Graham submitted and I received or the

farm received is in section 10. It is basically one page in length,

and, yes, there’s a number of other documents that were available

that indicate by animal, and they’re attached and referenced in both

of our submitted court documents on what the value of each bull is,

but this is a summary of what was provided. 4.15 percent of the

mature - - this is the last sentence: (as read)

Page: 54

4.15 percent 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.

So 4.1 percent, 8 bulls, 9 bulls of the 200 mature bulls are hunt

bulls. Not only is that inaccurate, it borders on ridiculous, and it’s

completely unsubstantiated and it’s nothing more than an opinion

that has no grounds and cannot be supported. Velvet - - the points

to review, point, Velvet sales play a significant part in the herd

income. Agreed. (as read)

Dr. Bischop’s assigned value of $4,800 for the hunt

herd is premised on the fact that the entire herd is

made up of trophy bulls.

Well, there’s more - -bulls in that herd that are worth more than

4,800, and there’s bulls that are worth less. We applied a formula

that recognized, based on previous hunts that is substantiated, on

the value of the bulls based on what the hunts have been. The goal

of Willow Hollow game farm or Willow Hollow Game Ranch is

not to be buying bulls on a one-off basis. The goal of Willow

Hollow game farm is to build a herd of their own animals so that

they don’t have to buy animals from producers like myself. It’s

simple economics, good management. If they pay me $20,000 for a

bull, that’s $20,000 less income for them. Why would they buy a

bull from me if they can grow that bull? They’ve culled the bottom

of their herd. They’ve got a mature group of bulls.

We didn’t dispute the 31 hunts per year. That’s - - those are the

real numbers. We applied the same number moving forward, even

though we’re moving into an up economic time and even though

the number of opportunities and the number of hunt farms are

probably declining in Saskatchewan. They - - we agreed. We’ll use

31 moving forward, 31 hunts per year. That’s five years. Five years

is the same number that they used on the -- on the reverse average

to come up with 31. Let’s use 31 on the move-forward average. It

seems to me to be fair, it seems to me to be reasonable, and it

seems to me that that addresses the full herd of mature·bulls, and at

the same time the farm will have increasing numbers of bulls

moving into the mature herd, replacing those bulls that have been

shot or hunted, and it’s a -- what a wonderful industry. You can

grow - - you can keep your bulls for six to eight years until they’re

ready for the hunt - - hunt business and, at the same time, generate

revenue through velvet sales for that entire period of time. It’s a

great way - - it’s a great industry, and that’s why we’re starting to

see producers - - more producers come back to the industry and, in

Page: 55

fact, new producers enter the industry because it is that type of

industry. It brings a different value, a different look to the entire

livestock sector. It is something different. It is not - - you don’t do

this with beef. You don’t do it with any other livestock sector

outside of the cervid industry that I’m aware of, and yet the

opinion is this is a meat business based on personal experience and

the lack of knowledge of the industry.

(Transcript of hearing, pp 78-86)

[133] Mr. Wehrkamp also addresses Dr. Bischop’s assessment:

I should spend a moment on Dr. Bischop’s assessment, which is

section 5 I believe. Whoops. When we received Dr. Bischop’s

report, and initially we did - - we had to ask for it. There was no

exchange of information, limited communication through this

process, but we asked for it, and CFIA shared it. In fact, CFIA

shared -- weren’t required to, but when questioned and challenged

with the access to privacy and information act, they - - in the

openness and transparency perspective, they did share some

additional information with us, and we appreciated that.

When we looked at this report, we said, m’mmm, okay, it makes

sense. There’s a valuation by age that makes sense that we can live

with, that makes reasonable valuations and can be applied to this

particular farm.

(Transcript of hearing, pp 86-87)

[134] On cross-examination, Mr. Wehrkamp confirmed that WHGR was compensated for 266

bulls in total.

[135] Mr. Wehrkamp also confirmed that WHGR did not provide receipts for the elk that had

been block-purchased from various farms and that the valuation figures provided for the block-

purchased animals came from other farms.

Page: 56

[136] Mr. Wehrkamp also conceded that when an actual receipt was provided for 901W – the

Stinson bull – CFIA provided the maximum value of $8,000 allowed under the Compensation

for Destroyed Animals Regulations.

[137] Mr. Wehrkamp also conceded that certain pieces of information had made a difference to

Dr. Graham’s calculations:

Q

So March 25th we have him suggesting assigning a value

of $4,000 to a hunt bull. On April 3^rd, I’m going to suggest perhaps

about a week later, CFIA receives an invoice from Klettberg Farms

for a sale of Willow Hollow – to Willow Hollow for some elk

averaging $4,250, and on May 2^ndhis final report has increased

that amount to $4,500, correct?

A

Mmhmm.

Q

So we could possibly -- now, you said this morning that

you didn’t think that the -- that Klettberg sale had actually made

any difference, but is it possible that it did?

A

I would like - - it may have. Yes, it’s possible.

(Transcript of hearing, p 132)

[138] Mr. Wehrkamp also clarified what he had meant by velvet prices:

JUSTICE:

Are you telling us that the explanation you have

given to us now about the majority of the antler as opposed to the

rest of the antler, that was not something that was made available

to CFIA?

A

No, absolutely. I mean in our discussions, we would not

have used $40 as an average price paid for antler to CFIA. Our

discussions with CFIA would have been clear. The price for antler

was 27, $28 a pound, and we referenced $28. Some producers

received 27 or - -

JUSTICE:

Okay.

A

So that information would have absolutely been shared

with CFIA, and the purpose of giving you the range is to highlight

Page: 57

the simple fact that for the first time in 16 years, a price of $40 was

paid per pound for velvet, which is significant. That simply means

that there’s been an upward trend in the market and we’re starting

to achieve levels of profitability that I spoke in my - - of in my

testimony this morning.

Q

MS. BIRD: So the only information that was provided on

velvet prices was the information that was provided in your report

and what was provided by the elk - -

A

Q

A

Alberta Elk Commission.

Correct.

Q

And what did Dr. Graham value the velvet at in his final

report?

A

Q

A

Q

$30.

$30?

I believe so. That’s the number that - -

So if we flip to your tab 2, page 81, we have a reference on

the first page - - it was not a one-page report, correct? It was a two-

page report?

A

Q

A

Q

A

Q

I’ll just need a moment to - -

Oh.

- - search through my - -

Sorry. Imagine if we hadn’t numbered them.

Yes. Thank you again. Okay. I have it.

So you’re there, so at paragraph 4 - - no, paragraph 3 - -

and I think I see the confusion here - - Dr. Graham references

information he received from Dr. McLane of CFIA’s Battleford

district office for the 2013 prices at $30 per pound, but if you go

down to the next paragraph and one, two, three - - let’s say the

fourth line: (as read)

Since velvet should average at least $700 per bull

for 2014, 20 pounds at $35 per pound.

Page: 58

So he did actually assign a value of $35 per pound, correct?

A

Correct.

Q

And Dr. Graham asked for evidence of actual 2013 Willow

Hollow sales for velvet, correct?

A

Q

Correct.

And the actual sales of the velvet were not provided,

correct? The averages were. We saw those attached to your report,

but the actual sales, the amounts were not provided, correct?

A

It’s kind of six of one, half a dozen of the other, but yes.

(Transcript of hearing, pp 148-150)

[139] Mr. Wehrkamp also reiterated why WHGR considered receipts for the block-purchases to

be irrelevant:

A

Correct. The reason - - but at the same time, if I may

expand on that answer, the purchase receipt does not by itself have

any indication, provide – 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, I explained this morning that 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.

…

(Transcript of hearing, p 156)

A

Don’t use the numbers as a reference point, but if you have

a bull that cuts 30 pounds, that’s a superior bull. He’s probably - -

and if he’s six years of age or older, he’s going to the hunt - - hunt

area because he’s a mature bull that has value. The bottom bulls

that are not performing are the slaughter bulls, and those are the

bulls that we have stated that were culled from the farm, that were

culled from the blocks of purchase which completely devalues the

purchase price because the purchase price on the receipt for

whatever dollar value it might be is based on 100 bulls. When you

take away 10 or 15 percent of the lowest-performing bulls and sell

Page: 59

them for meat, whatever the meat market might be, they’re gone.

What you are left with are your 20-pound or 15-pound bulls, your

top-performing bulls. Those bulls have greater value than the

purchase price that would be shown on the receipt. The receipt

therefore has no value to the exercise of determining what the

value is three years after those animals have arrived on the farm

and a third of some of them - - some of those blocks of bulls - - up

to 50 percent of some of those blocks of bulls have gone for meat,

and they are left with a small number of the superior bulls.

Therefore, the receipt for the purchase price is irrelevant to what

the value of the bull is three years later, and if it would - - and trust

me. Absolutely if there was any indication that you could draw

from a receipt for 50 bulls for a single price, we would provide it.

Willow Hollow would be happy to provide it, but in that group of

bulls, there was purchases. Some bulls may have been valued at

8,000 or $10,000. Some bulls probably barely made meat value,

but the receipt doesn’t show that. It 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. It’s one or two or three years older and we’ve already agreed,

I think, that as the bull ages, their value increases. What value does

that receipt have?

…

(Transcript of hearing, pp 158-159)

A

That was for - - that was to provide context to - - to the

exercise. Never once did we have -- or have we said that every bull

is worth $9,000, if that were the average price. All we’ve said was

here is a list of receipts within a very small industry and a very

small market of a producer who is selling animals to bring into

context that these animals do have value more than meat. Were

they specific to Willow Hollow? Only a couple were, and we’ve

already agreed that - -

(Transcript of hearing, p 160)

[140] Mr. Wehrkamp also confirmed that these issues had been made clear to CFIA:

JUSTICE:

The explanation you’ve given us about the

difference between the sale of individual animals and the block

purchase and its significance, did you have that discussion with

CFIA?

Page: 60

A

Absolutely. We’ve tried repeatedly to explain the process

of how that works. There’s - - there seemed to be - - and in all

honestly, I believe that Dr. Bischop understood the concept of what

we were talking about, and I believe that when he did his

valuation, he took that into consideration, but earlier this morning I

referenced a document where there is a handwritten note that says

cull animals are - - that the cull animals and any adjustment to

value because of cull animals doesn’t make sense or won’t be

considered. I’d have to re-pull that document. I think I provided it

to you.

JUSTICE:

I remember it, yes.

A

Which is absolutely in error from a live - - that’s not an elk

question or an elk statement. That is a livestock statement. It’s

absolutely in error, and when we’re faced with a challenge of

providing receipts on a block of animals and a good percentage of

those at the bottom-producing animals are gone, we fail to see how

that receipt will bring any benefit, any clarity, any reasonableness

and any fairness to the award of compensation. That’s why they

weren’t shared.

(Transcript of hearing, pp 161-162)

Mr. Blaine Weber – Highlights

(a)

Background and Experience

[141] Mr. Blaine Weber is from Lanigan, Saskatchewan and has been an elk producer for

18 years. He is also involved with a new generation co-op called Norelko formed by 70 elk

producers. Mr. Weber is on the board of directors and a principal in the velvet buying process

aspect of the co-op’s business.

[142] He says that over the last 5 years, Norelko has purchased between 180,000-200,000

pounds of velvet and in 2015 has purchased about 30 percent of the velvet produced in Western

Canada. He says he is knowledgeable when it comes to pricing antlers.

Page: 61

(b)

Market Information

[143] Mr. Weber says that in 2015 the lowest price for velvet (there are a couple of different

grades) was $48.00 per pound and the highest price was $53.50 per pound. In 2014, the average

was around $40.00 per pound, in 2013 the average was $27.00 per pound, and in 2012 the

average was $20 per pound. So there has been a significant increase in the value of velvet over

the last several years.

[144] Mr. Weber also brokers elk for meat and the values there have also increased

significantly:

A

We were paying to the producer seven years ago when I

started about $1.10, a dollar and a quarter per pound of a hot

hanging carcass weight. In the last three years, we’ve gone from

about $3 per pound hanging carcass weight to - - I just shipped

about three weeks ago that the buyer paid - - delivered to the plant

he paid 4.35 a pound, so we’ve gone up.

Q

A

Q

To the producer?

To the producer.

Wow.

JUSTICE:

That was in 2015?

A

Yes.

JUSTICE:

Okay. What about 2014?

A

About probably in the neighbourhood of 4.10, about 4 - -

3.85, somewhere in there.

(Transcript of hearing, pp 167-168)

[145] As for the price of hunt bulls, Mr. Weber testified as follows:

Page: 62

Q

When meat prices go up by 50 - - by 100 percent, more

than 100 percent over five years, velvet is approaching, as you said

I think, 200 percent over a period of time, what happens to the

price of animals?

A

Well, that doesn’t even take into consideration where the

hunt market has gone. The trophy market has added a real pressure

on pricing of bulls. Your average bull, five years ago we could buy

it for meat at fifteen to two grand, probably somewhere in there,

and there was just a load of bulls shipped to a hunt preserve out of

Alberta that had never been grown out that brought $4,800 U.S. at

the farm gate.

Q

So 4,800 U.S. in today’s sad but true world would be about

$6,000.

A

Yeah, and that’s for a group of bulls that had been

unproven.

Q

A

So no special genetics.

No, never been grown out. We don’t even know what

they’ll grow.

Q

Wow.

A

And so our big problem is supply. At the height of the - -

when I got in in ‘97, about two or three years later, the herd - - 90

percent of the captive elk are in Saskatchewan and Alberta. We

were somewhere in the neighbourhood of probably 85,000 animals

between the two provinces. The records are supposed to be -- I

don’t quite believe the government numbers that we’re getting off

the programs, but from my experience in trying to access meat and

velvet and talking to a lot of the producers, I don’t think the

combined herd would top 20,000 in those two provinces now, so

we’re down 75 percent on total numbers, which is pushing - -

really pushing the availability of price.

Q

Obviously that has an effect on animals that are for sale.

You mentioned already that you’re having more of a challenge

accessing meat animals and animals - - you also buy - - do you also

buy bulls for – buy some and sell some animals yourself?

A

Mostly through the meat market if we come on a herd

that’s distressed or the guy’s getting out, he’s done. We’re in the

same position as every other livestock industry. We’re all 55 years

old or better, and it doesn’t seem like - - there’s just guys that don’t

want to continue, so if they don’t have avenues to let them out,

Page: 63

they end up going to the meat market, of course. If you see a group

of bulls, then there’s an opportunity to maybe turn them into the

hunt industry or a producer that’s keyed on that industry.

Q

I just want to clarify one thing, and then we’re going to

move off this topic. The value of hunt bulls is obviously, then,

going which direction?

A

Up. I did a deal myself personally to buy out my partners

two years ago. I sold a group of unproven bulls, 25 bulls for

$50,000. It was - - I probably sold them a little cheaper than what I

could have got for them, but he was willing to pay me upfront and

I had a two-year delivery period, okay? I want to keep some of my

genetics, so this year to fill that order, I had to go out and buy

some bulls to fill that, and my average price to replace those bulls

was $3,400 each --

Q

A

Q

Okay. Okay. Thanks.

- - as opposed to the 2,000.

Okay. Okay. Good. Well, I think we’ve spent enough time

on market evaluation and what’s happening. That confirms some

of the information we discussed earlier before you arrived with us.

I want to talk a little bit about hunt bulls. The Court is aware that

let’s see. How should - - when would a bull normally be

considered a hunt bull, at what age?

A

Well, it’s changed over with the development of genetics.

We’re getting bigger bulls at younger ages now. Prior to that we

were probably looking at a seven or an eight-year-old bull as being

a prime hunt bull. That’s probably moved down to maybe five,

maybe six years old anyways probably, but you’re looking at a six-

to-seven-year-old bull before you really consider growing it up to

hunt I think.

Q

Yeah. Okay. Fair enough. Okay, and what about

incremental - - let’s talk about the growth of bulls. Bulls grow --

are they bigger every year? Do the antlers get bigger? If they’re

two-year-old, three, four, five, do the antlers get bigger every year?

A

Yeah, as a rule they do to a certain age, and then they will

start to decline in my experience.

(Transcript of hearing, pp 168-171)

Page: 64

[146] Mr. Weber was asked to comment on the price lists of the producers that WHGR used to

value replacement animals:

MR. WEHRKAMP: Yes, what I’m going to present the witness

is the price list of the producers that were used to establish a

valuation on the Willow Hollow game farm as replacement

animals and ask Mr. Weber to comment on the validity of the price

list provided by --

JUSTICE:

MR. WEHRKAMP: 7.

JUSTICE: Okay.

Yes, and that occurs at tab -- is it tab 2?

MR. WEHRKAMP: You have four pieces of information. The

first that you’re looking at now is the Alberta Commission annual

report on what they believe to be fair market value of the industry.

You then have three additional estimates, if you wish, that were

solicited from farms in Saskatchewan that would potentially be

able to supply Willow Hollow with average type plus average-plus

genetics. I’d like you to just spend a moment to look at them, and

if you want to comment on them individually, you’ll notice that

one’s higher than the other. Two are more or less the same, and

then there’s the Alberta one. If you would like to provide any

comments on any individually or an opinion as to the validity of

those prices that are quoted there.

A

Well, they seem fairly in line, but as - - the one that I would

say, as we continue on here, it’s kind of the rules nobody expected

the sale I talked about in Alberta for unproven bulls to be what it

was, so to replace bulls now, I’m not sure, and we’re dealing with

a point in time I guess, whatever, but it - - yeah, they’re - - they’re

within range.

Q

So did I understand you to say that based on the point of

time, they’re relevant, but based on today’s replacement cost or

market value, they are - -

A

Q

On a whole they would be low.

They would be low. Okay. Thank you.

(Transcript of hearing, pp 172-173)

Page: 65

[147] As regard the culling process and its impact on values, Mr. Webber testified as follows:

Let me just - - let me ask you the question, then, can you

Q

explain what culling means and if that’s an applicable term to the

livestock industry?

A

Oh, for sure. It means getting rid of the less desirable stock

either due to age or inferior genetics or just physical qualities that

don’t fit the program.

Q

What is a reasonable number, broadly speaking, in the

livestock sector that you would cull on an annual basis?

A

Q

Oh, minimum 10 to 20 percent.

Okay. What is the value, then - - if you cull off 10 to 20

percent annually, what happens to the value of the animals that are

left?

A

Well, if you’re going to keep something longer, obviously

you’ve got to feed it, so your basic upkeep costs would have to be

considered into how long you’re keeping it, and the -- if you’re

doing your job right, the value of the animal you’re keeping should

increase.

Q

If you cull off the bottom animals, keep the better animals,

the overall value of the herd --

JUSTICE:

You’re leading again.

MR. WEHRKAMP: I’m sorry. I thought - -

The value of the herd should go up, yes.

Q

A

(Transcript of hearing, pp 173-174)

[148] Mr. Weber conceded on cross-examination that he had not been involved in the WHGR

valuation, but he has sold elk to WHGR and he gave the following evidence regarding receipts:

Q

Right. So what my next question would be would be did

you provide receipts for - - when you sold the animals to Willow

Hollow did you provide receipts or invoices?

A

It’s usually done on the permit. There will be a copy of the

permit that has the pricing done on it.

Page: 66

Q

A

On the cervid movement permit?

Sometimes we use that. I’m - - I can’t 100 percent tell you

for sure.

Q

But they would have something in their records in relation

to how much they would have purchased from you - -

A

Q

A

Yeah, should have.

- - that told them how much - -

Should have. I would say one of us will have. We’ll have a

cancelled cheque, if nothing else.

(Transcript of hearing, pp 182-183)

Mr. Terry Moorman – Highlights

(a)

Experience

[149] WHGR’s third witness was Mr. Terry Moorman who has been farming elk for about “20,

25 years” and is now a “full-time elk producer/farmer”:

A

I’ve been farming for about - - elk for about 20, 25 years.

Basically I’ve been concentrating, I guess, on a velvet herd and

upgraded genetics I think around 2013 for the sole purpose of

increasing production, getting better animals ‘cause the markets

across the board - - probably you heard this three or four times

already today - - are all showing drastic improvement due to a lack

of animals, so your supply and demand markets across the board

are considerably better.

Q

That would be for velvet?

A

Velvet is the leading purpose we get into these animals, and

hunt is another big one. I would like to impress strenuously this is

not a meat market, which we are led to believe and compared to

the beef industry. We are not. It’s an excellent culling procedure.

Q

Thank you. So meat, then, really you’ve got - - you

mentioned you’ve got velvet and hunt. That’s the primary markets?

Page: 67

A

Q

A

Q

A

Right.

And meat is the culled market.

Right.

Okay.

My goal was for a velvet establishment, and coming off of

10 years of low prices, BSE, CWD, those markets really weren’t

there earlier and with the shortage and the price increase, a drastic

swing across the board, like I said.

(Transcript of hearing, pp 185-186)

(b)

Depopulation

[150] Mr. Moorman’s elk farm was also depopulated in 2014 as a result of CWD. He is not

happy with the way he has been treated by CFIA over his claim for compensation:

A

- - unfortunate situation of getting caught in the CWD web

and got my bulls depopulated, which is a very trying experience.

You would think dealing with this, you should be dealing with

people who are versed in the industry. It took very little time to

realize a severe lack of knowledge. You can’t compare elk with

beef animals. They are not in the same category. You cannot base a

total herd of velvet-producing animals are worth so much a pound.

Where’s the built-in value for velvet? Where’s the built-in value

for hunt? There is none. I did not upgrade genetics. I paid $3,500

for breeding cows. I paid $16,000 for an elite top-class bull. I

guess if I was breeding them for meat, I would have went out and

spent 16, $1,500. I could have got every bit as good a meat animal.

I’m not concentrating on that, and I wasn’t interested.

I don’t - - through these conversations, it gets referred back to the

meat prices all the time. It’s a redundant point. This is not a meat

industry first.

Q

Okay. So let’s -- thank you, Mr. Moorman. We’ve heard

lots of testimony about what’s happening in the elk industry. Can

you just in a very few words give us your perspective on the

numbers of animals that are available in industry. What’s

happening to the overall population?

Page: 68

A

Well, like I said, through the BSC, CWD, the herds are

down, I don’t know, 25 percent of what it used to be, and I would

have an easy solution for this whole matter. If my animals are

worth let’s say $2,000 like Dr. Graham considers they’re worth

meat price, simple, replace them. You cannot go to a farm right

now and buy them with a limited amount. You just can’t source

that many animals.

(Transcript of hearing, pp 186-187)

[151] Mr. Moorman says he has had problems in dealing with CFIA when attending an

evaluation meeting in Saskatoon at which Dr. Graham was present:

Q

Right. Thank you. I just want to spend a moment on your

experience with CFIA. September 4th you attended a meeting in

Saskatoon. Some attended - - I believe there was an attendee by

telephone conference?

A

Q

A

Q

A

Q

A

Q

A

Q

A

Q

A

Q

Mmhmm.

A Dr. Dunn, was it not, I believe?

Yeah.

I was there.

Yes.

Dr. Graham was there?

Yes.

Yourself, your wife.

Right.

Was there anybody else there?

Initially the - - no, I don’t think so.

I don’t - -

No.

Okay. Could you -- how did the conversation go and what -

- I’ll just ask you how did the conversation go? What happened?

Page: 69

What statements were made? What led you to believe in great

confidence that you would be treated fairly or otherwise?

A

I didn’t think I was going to be treated fairly because right

off the bat in the conversation, the - - it was referred back to beef

industry all the time. Well, it’s not the beef industry, and every

second or third conversation that you’d have, the statement kept

coming up, I don’t understand, I don’t understand. Well, that

doesn’t lead me to really believe that we’re going to have a really

intelligent two-way conversation here, and then we got talking

about my herd a little bit, you know, paid $16,000 for it, a lead

breeding bull, and Dr. Greg Graham, he looked at us directly in the

eye and said, Why would you pay a penny more than meat price

for an elk, I don’t understand. Well, I’m sort of at a loss right there.

How do you explain that one? I guess I wanted to give somebody

14 more thousand than I normally had to pay. I don’t know how to

answer that.

Q

Have you replaced that bull?

A

Oh, yeah. Unfortunately I replaced him with another high-

genetic one, and I had to pay 20,000 for it.

Q

Why would you pay $20,000 for a bull when you paid

$16,000 for a superior bull what, three years earlier, did you say?

A

Right. The markets were - - just reflected a higher value of

markets.

Q

A

Q

The bulls were of equal quality?

Well, and as I would say, yeah. Yes.

So the increase in what you paid are singularly based on

market adjustment.

A

Q

Market adjustment, right.

And you purchased that replacement bull when? Which

year is close enough.

A

Q

A

2014.

Okay. 2014. The year that your herd was depopulated.

Right, after I lost my breeding bull.

(Transcript of hearing, pp 189-191)

Page: 70

(c)

Age and Value

[152] As regards the age when bulls are ready for the hunt market, Mr. Moorman had the

following to say:

Q

Okay. Fair enough. What about hunt bulls? When’s a bull a

mature bull? When does a bull - - what would be a reasonable age

for a bull to enter the hunt market?

A

Five, six years, and then I guess you’re going to get an

alteration on that depending on your genetics, type of bull, quality.

Q

But generally a bull that - - and let’s pick the number six - -

of six years you would consider from your - - from your

knowledge and experience of 20 years in the industry - -

A

Mmhmm.

Q

- - that bull would be considered a mature bull and be

appropriate for the hunt market.

A

Correct.

(Transcript of hearing, pp 188-189)

[153] Mr. Moorman also confirmed that bulls do increase in value as they get older to a certain

point.

[154] In cross-examination, Mr. Moorman conceded he had never sold elk to WHGR and that

he had not participated in the compensation process for WHGR. He says that when he sells elk,

he issues receipts.

[155] Mr. Moorman also conceded that he has filed his own appeal of the compensation he

received from CFIA as a result of the 2014 depopulation on his farm.

Page: 71

B.

Respondent’s Witnesses

Dr. Graham’s Evidence – Highlights

(a)

Background and Experience

[156] Dr. Graham is a veterinarian who has worked for the CFIA animal health division in

Saskatoon for the past 23 years. He was appointed as the chairperson to value WHGR’s

depopulated bull elk herd in 2014.

[157] Dr. Graham has been involved extensively with different animals but, prior to WHGR’s

evaluation, he has only had one previous experience with valuing elk when he chaired the team

that evaluated the Forjay Farms herd in 2013. After his experience with WHGR, he also chaired

the team that evaluated Mr. Moorman’s herd, which is also under appeal.

[158] Dr. Graham confirmed Mr. Wehrkamp’s account of the recent evolution of the elk

industry in Saskatchewan and concluded as follows:

…The industry, from what I see, has evolved into a meat industry.

The prices, as indicated yesterday, have been going up. Velvet is

recovering. It’s getting closer to that $40 a pound. So between the

meat and the velvet, you’re getting your -- your returns, and if

you’re fortunate enough to have animals that are considered trophy

or hunt quality, you have that additional option to market them

near the end of their natural economic cycle.

(Transcript of hearing, p 221)

Page: 72

(b)

The WHGR Evaluation

[159] The agenda prepared for the March 5, 2014 meeting appears as Exhibit A-1, Tab 2, pages

16 and 17, but Dr. Graham conceded that he did not provide a written copy until after the

meeting. However, he says that he conducted the meeting in accordance with the agenda. He

says that at the meeting, he went over the parameters of the legislation and the approach to

compensation.

[160] He explains why he thought receipts were important:

A

I thought they were important ‘cause it just gives you an

idea what - - what these animals are. It profiles, you know,

basically whether they’re hunt animals, whether they’re

meat/velvet animals, breeding animals. By the - - the receipt

basically tells you, you know, basically what you’re getting and

what you paid for. I had to have a base to start from. I mean an elk

is an elk is an elk is an elk if you see five in a pen, sure, but there’s

different uses for those particular elks. If you have some history,

you have some background, dollar production, some velvet

weights, velvet sales, progeny sales if it’s a cow, some idea, you

know, what that particular animal is and what value could be

assigned to it.

Q

So you - - you required this information so that you could

properly get to a starting point or - -

A

Yeah, a starting point.

(Transcript of hearing, pp 228-229)

…

A

Well, any other compensation I’ve been involved in the

past, whether it was talking about horses or sheep or whether it

was injuries in cervids, whitetail deer, all testing on premises, I

always start with receipts. I mean you’ve got to have some idea of

what the animal is, basically what its current value is. That’s where

I’d like to start, and I was - - I asked for that, as I said, initially

when I went through the agenda.

Page: 73

(Transcript of hearing, p 230)

[161] He also explained the importance of the Common Procedures Manual, but indicated that

he regards it as a “guideline”:

A

The Common Procedures Manual has a number of different

things in it, common procedures that are - - are commonly done

within the scope of our business, our day-to-day business in animal

health, and compensation is one of the components, so that manual

- - because compensation does come up pretty regularly if we

discover a reportable disease and we have to, you know, declare a

premise infected and, as such, order - - issue a destruction order

and animals or things have to be removed or destroyed, and we pay

compensation for such. So this just lays out how - - how it works.

I’m talking - - okay. I’m just - - are you talking about Common

Procedures Manual, but I’m talking about this component of it,

being the section 12 basically just goes through, indicating what’s

involved and how the process works.

Q

Are you required to strictly adhere to the Common

Procedure Manual?

A

It’s - - It’s a guideline. If you read through it, you know,

it’s - - it gives you some ideas that are pretty closed in. Others are a

little more -- you know, a little more latitude.

(Transcript of hearing, pp 229-230)

[162] Dr. Graham also acknowledged that Mr. Wehrkamp went through his presentation at the

March 5, 2014 meeting.

[163] To prepare himself for the WHGR evaluation, Dr. Graham affirms that he looked at

recent awards of compensation for like animals (i.e. Forjay Farms where receipts had been

provided).

Page: 74

[164] Dr. Graham also talked with Dr. Alex McIsaac, CFIA’s regional disease surveillance

specialist for the province of Saskatchewan. He says that Dr. McIsaac provided him with recent

values that had been paid for cervids, specifically whitetail deer.

[165] Dr. Graham says he looked elsewhere because he was “having difficulty” with the values

that WHGR was putting forward:

[W]hat I was looking for wasn’t what they were providing. Randy

[Mr. Wehrkamp] was providing me receipts from his own

premises…And basically I didn’t see the relevance of what his

animals were selling to as respect to what animals on Willow

Hollow were.

[166] Dr. Graham also reviewed the receipts that were provided by WHGR for replacement

animals purchased after the depopulation.

[167] Dr. Graham says that he was aware of the kind of business that WHGR was running:

A

It was basically a breeding - - a breeding farm, and they did

tell me that, you know, they had been depopulated in 2009 and

they wanted to get back into the elk business ‘cause they had put a

lot of infrastructure into the business. They were focusing on, you

know, the hunts. They spent some money, and they wanted - - you

know, that’s where their interests were and that’s where their

living was, and they wanted to get back in, so since 2009 they had

been buying females and males, bringing them in, and it made

sense. They were basically culling the low end. When I say the low

-- yeah, the low end, and the ones that weren’t either going to

make it as a velvet bull - - I’m talking about the males now - -

they’d send them to slaughter. The ones that had some value that

they could, you know, basically keep them for a year or two or

four. As long as it was making economic sense, they’d keep them,

get some velvet sales from them, and if they developed into a hunt

where the animal they can sell as a hunt, they’d end up on a hunt

farm.

Page: 75

The females did the same, bought females from about 10

producers. That’s what I was given to believe, culled them as well.

They kept the better ones. The low end went to the market, and

they were trying to breed up so they wouldn’t have to buy these

hunt bulls. It made more economic sense. It made more money if

you could produce them. At least you can control what you had

each year as opposed to competing with various other hunt ranches

in the province for the same amount of stock, so, yeah, the

business plan made sense to me.

(Transcript of hearing, pp 236-237)

[168] Dr. Graham also looked at the cervid movement permits that had been issued to WHGR:

-- what types were Willow Hollow - - were being issued to

Q

Willow Hollow or to consignors who were transporting onto

Willow Hollow?

A

Well, there were mature males where some permits were

just basically straight - - a permit with males. Other permits were

basically females. Some had mixtures of females, males. There

were some permits that were basically hunt-ready animals to go to

hunt that particular year basically issued August, September

somewhere, so they would go direct to the hunt farm I assumed to

be hunted that year because they were consigned from hunt - - or

people that raised hunt-ready animals.

JUSTICE:

Excuse me. The permit itself doesn’t tell us

anything about the animal, does it?

A

Well, they’ll have general classifications. They’ll call them

- - I think what I recall, they’ll either put hunting or breeding, and

that’s the ones I remember.

(Transcript of hearing, p 239)

…

Q

Okay, but overall in a general overview, so we have three

cervid movement permits, one for hunting, one for breeding, and

these are the classifications, of course, that have been assigned and

the information that’s been received by the producer, but we have

hunting, breeding and slaughter.

A

Correct.

Page: 76

Q

So big picture, what does that give you as a picture of what

the operation is? And does - - sorry. I’ll just ask one question at a

time. What does that provide you with information in relation to

what your understanding is?

A

Well, basically they have animals that end up eventually at

slaughter. There’s animals that possibly moving into breeding is --

or breeding or velvet, velvet - - meat - - velvet/meat and the hunt

would indicate that potentially going to be hunt animals.

Q

So is that a fluid of a static type of operation that you’re

seeing though those documents?

A

Well my impression of it was fluid in the sense it was

ongoing. You had all three components going on at one time.

You’d be buying new ones. Some of the ones that you bought

previously weren’t, you know, meeting the standard you were

looking for to upgrade your herd, so you’d send them off. Some of

them were actually better than what you thought. You put them on

the hunt farm, you know, if you could find a sale, so it was a

dynamic ongoing.

Q

And so does that confirm what you understood about the

operation overall going into the compensation process?

A

You know, what was from like Randy’s overview from that

first meeting, correct.

(Transcript of hearing, pp 241-242)

[169] Dr. Graham was also aware that WHGR had been depopulated in 2009, but he was not

involved with either the 2009 or the 2014 depopulations. He was aware that, in 2014, although

all of the bulls were destroyed, only five animals tested positive. The depopulation documents

confirm the age and sex of the animals.

[170] After Dr. Graham produced his Valuation Report, and before the Minister made a final

decision, the report was reviewed by the regional director of CFIA who was aware that WHGR

was not happy with Dr. Graham’s evaluation.

Page: 77

[171] Dr. Graham confirmed the amount paid out on SNOR 901W:

That was SNOR 901W. That bull originated for Randy

A

Wehrkamp’s premise, and the receipt was provided. I think it was

ninety- two fifty for the receipt, so we can max out at eight, so we

gave them the $8,000.

(Transcript of hearing, p 259)

[172] Dr. Graham goes into considerable detail as to how he arrived at his final evaluation. This

evidence is central to the dispute and needs to be examined carefully:

Q

So your initial value for meat was sourced from AWAPCO,

which we understood from Mr. Wehrkamp yesterday was - - and

I’m not actually certain we confirmed this, but where is

AWAPCO?

A

AWAPCO’s located -- it’s the Alberta Wapiti Products Co-

operative. I think it’s located in Leduc or - - but they basically

lease out the slaughter facilities from Bouvry meats in Fort

Macleod.

Q

Okay, and you had initially assigned a value, I believe, at

$7 per kilogram?

A

Q

That’s correct.

And then you had assigned - - in terms of hunt bulls for

2012 or bulls assigned in 2012 are 2011 values there as well?

A

Correct.

Q

And what was your meat value that - - or your velvet value,

sorry - - if we go, one, two, three, four, five -- the sixth paragraph

in, your velvet value that you had initially come up with was

approximately $30 per pound?

A

That’s correct.

Q

That’s what it says? Okay, and then if we go down two

more paragraphs, what were you valuing there?

A

Q

On the same page?

Yes.

Page: 78

A

Q

A

Q

A

Q

47?

Yeah, page 47.

Right.

It starts off with, One-third of the hunt herd.

Correct.

And what were you initially valuing the potential trophy

caliber of the animals at?

A

At $4,000, 370 and better. That would be the SCI scoring

system.

Q

Okay, and that last sentence before, Thanks, on that page,

what does that - - what does that say there?

A

(As read)

We are open to discussing these numbers if you

need further clarification or supporting

documentation to present.

Q

And after March 25th, as we understood from yesterday,

Willow Hollow provided an additional invoice, correct, or is that

your - - is that also your understanding, that they had provided an

additional invoice?

A

Invoice for - - I’m not --

Q

Oh, my apologies, for animals that they had purchased after

- -

A

Q

A

Oh, correct.

- - they were depopulated.

They had bought some animals - - my - - looked to me that

they were buying animals to start - - more than likely supply the

hunt farm for the year.

Q

A

And where did that invoice or receipt come from?

Manfred Klettberg.

Q

And do you recall how much the animals were purchased

for?

Page: 79

A

Q

Seventy-two five.

On - - and on average - - now, I did some math, Mr.

Wehrkamp, yesterday, and it turns out that you were right, so it

was about forty-two sixty-four.

A

Q

A

Q

Was it?

It was.

Maybe I just rounded it off.

I think $14 isn’t going to make or break this, but, you

know, in the interest of being accurate, I want to be sure, so - -

A

Q

I apologize for that mistake.

That’s all right, but - - but it was - - we’re talking about

between 42 and $4,300 - -

A

Q

A

Q

Yeah.

- - was the average price -•

Correct.

- - of the animals that they had purchased, and so then in

your final report, which Mr. Wehrkamp had gone over yesterday,

what did you end up assigning as a final value to those bulls?

A

Q

A

Q

What tab is that again, Sarah?

That would be your final report.

Correct.

You know, we can refer to the - - because, of course, we

have many copies, but we can certainly refer to the one in tab - -

A

Q

I can - - I think I can recall.

Well, for the Court’s purposes - -

JUSTICE:

Yeah.

Oh, sorry.

MS. BIRD:

A

Q

- - maybe what we’ll do we’ll take a look of

tab 122 of

Page: 80

A

Q

A

Q

That’s the big book.

Tab, yeah, 122, the smaller binder of Exhibit R-1.

Correct.

And this would be on page 3 of this tab, page 3 and 4

actually, and I simply am referring to this version of the report. It

is the same as the others. The difference is that the type is larger.

So what in the end did you assign to value the -- the hunt, the

trophy hunt bulls?

A

Q

A

Q

A

Q

A

4,500 I believe.

Pardon me?

I believe that was $4,500.

$4,500.

Correct.

And what did you end up valuing velvet at?

The velvet I gave an average of $700 per bull basically

using a 20-pound average at $35-a-pound, so the velvet/meat bulls,

I gave a $700 value to the velvet and I gave a meat average value

of $1,675 per bull.

Q

Okay. So in discussing your - - while we’re discussing your

your report, in terms of those hunt trophy prices that - - or values

that you were assigning, did you take into account the Klettberg

Farm invoice that was provided on April 3rd in determining your

final assignment?

A

Yes, I did.

Q

And, in fact, you said in your e-mail that you would

willingly do so, correct - -

A

Correct.

Q

- - that you would look at other information? So in terms of

- - and other information that you would have applied to the

valuation of the hunt bulls, the trophy hunt I’ll refer to them as, did

you take any other information into account?

A

Yes, I did. I used Mr. Wehrkamp’s - - he provided some

information from - - for 2014 for, you know, what people had sold

Page: 81

hunt-quality bulls were looking for with the different scales of - -

of scoring, took that into account, and I had to make a decision

where I wanted to put the trophy bulls, an average score ‘cause,

you know, what was I going to choose, so I thought a 400-inch bull

was between 350, it was between 450, and the hunts I think that

they had done the previous five years, the majority of the bulls that

were hunted out were in that range, so I thought 400 would catch

you know, would be a fair value to start with.

JUSTICE:

Just - - can I just - - for the purposes of clarification,

you told us that you took the Klettberg accounts - - sorry, Klettberg

receipt - -

A

Correct.

JUSTICE:

- -into account, and Mr. Wehrkamp’s information

for his 2014 sales. In what ways did you take them into account?

What - - what did you do with those? What difference did they

make in your calculation?

A

Well, you know, they talked about, you know - - basically

everything was geared, you know, to have as many hunts as

possible ‘cause that’s the top of the food chain in terms of value

and return, so they had been depopulated, their males, so basically

they needed - - you know, they’ve been long term in the business.

They want to maintain those relationships, so they had to get

animals onto that hunt farm that year, so basically they get a

receipt for 17 animals, and that averages out the forty-two fifty,

you know, that to me, you know, those were indicative of hunt

bulls. That’s what I basically assumed.

JUSTICE:

Okay. So it was a very influential receipt for you.

A

Yeah, it played a role, correct.

JUSTICE:

Okay, and Mr. Wehrkamp’s information, how did

that interact with the Klettberg receipt?

A

Well, I - - as -- I had chosen 400. That was a basically, you

know, in-the-middle-of-the-road score.

JUSTICE:

Yeah.

A

And I basically went to the different hunt farms or farms

that provided hunt bulls that he had provided and basically found

out an average, what I felt was an average of -- I think it was three

-- three farms, what that average price was, and so I picked 4,500

Page: 82

‘cause that’s what I thought, as well as taking into account the one

that that was for forty-two fifty.

JUSTICE:

Okay. Thank you.

And so to just expand on what Justice

Q

MS. BIRD:

Russell was asking you, when you were reviewing the information

at tab 7 of the black binder -- and I, of course, am asking you to

correct me if I’m - - I’m incorrect here as well, but - - so if you

look at tab 7 at page 2, and that is Mr. Wehrkamp’s 2013 price list,

and we already know that the Klettberg Farm animals were coming

in-between 42 and $4,300 in 2014. That’s what they were

purchased for, and you’re looking at that receipt and then you’re

looking here, and what are you finding off of Mr. Wehrkamp’s?

A

Q

Well, it’s 213 - - 2013 price list.

Right. Right, but where are you finding that range of

animal to sit?

A

Q

From the 391 to 410, it was 4,500.

And did you review the other information in this tab such

as Elk Valley Ranches or Cosha Farm Elk Ranch in terms of the

SCI scoring as well?

A

Q

A

Cosha Farms, between 380 to 400 was 4,500.

And Elk Valley Ranch prices?

Well, not - - not so much because he just gave them by the

- - by the years, year of age.

Q

A

Q

A

Q

A

Q

Well, I think he also provided the SCI scores as well.

Oh, did he? Okay.

Yeah. So did you feel you were in the - -

Oh, I see. Right.

- - range there as well?

Yeah. He had 390 to 410 was 4,700.

But-you knew that·they had already repopulated at least for

17 of those animals - -

A

Correct.

Page: 83

Q

A

Q

…

- - at·less than $4,500 each.

Correct.

Right. Okay.

JUSTICE:

Go ahead whenever you’re ready.

Q

MS. BIRD:

Thank you. So we -- we’ve spoken to the

hunt values that you assigned and the way that you approached

assigning the values. What of velvet? You said in your earlier

report that you - - or your e-mail that you were valuing it at - - and

we discussed this earlier - - at $30 per pounds?

A

Right.

Q

And then in your final report, you said that you valued it at

$35 per pound.

A

Q

A

Right.

So can you tell us how you - - how you valued velvet?

Well, Randy - - or Mr. Wehrkamp had indicated a 10 to 15

percent increase was expected for 2014, so I basically, you know,

give a 15 percent bump to the $30 and basically rounded it out to

35.

Q

Did you base any of these numbers off of your previous

compensation experience?

A

Q

A

Q

The previous compensation I had allowed for $30.

And per pound?

Per pound of velvet, correct.

And we know that Mr. Wehrkamp and Willow Hollow had

provided average weights of velvet that had been sold in 2013. We

had looked at that earlier. Did you take that into account in the

valuation of the velvet?

A

Basically what they provided was average weights for age

groups - -

Q

Okay.

Page: 84

A

Q

A

- - not prices.

Did you ask for further information on the prices?

No, I don’t believe I did. There was that Alberta Elk

Commission. I believe I looked at that.

Q

Oh. Sorry. I- - perhaps you didn’t understand the question.

Did you ask Willow Hollow or Mr. Wehrkamp for further

information related to prices or sales of receipts or - -

A

Oh, I see what you mean. When I was at the initial meeting,

I mean I asked for receipts and basically indicated live animals,

velvet, meat, whatever was available.

Q

Okay, and after the initial compensation meeting and

you’ve received the final report of Mr. Wehrkamp with the

information that was provided, the invoices and the receipts

relevant to SNOR 901W and the other accompanying documents,

did you ask for any further information?

A

Q

A

I continued to ask for receipts - -

Okay.

- - throughout my conversations, and to me I had to have

that as a starting point.

Q

And why was that important? I mean we - - you did speak

to that a bit earlier.

A

Yeah, just to profile, you know, what the animals were,

what their value was, you know, as close to the current year as

possible but going back three years.

Q

And you made that known to Willow Hollow and the

representative?

A

I believe they - - as many as times as I repeated it, they

were aware of it.

Q

If you look at -- and if you look at Exhibit A-1, which is the

black binder - -

A

Q

Mmhmm.

-- and you look at tab 2, and we see pages 27, 28 to - - or

just want to make sure - - 27 to 28, and that e-mail thread that’s

Page: 85

going - -that’s an e-mail thread going back and forth between you

and Mr. Wehrkamp, correct?

A

Q

Correct.

Okay, and so in that e-mail thread are you asking for more

information? So in the - -let’s say the e-mail that’s date - - or time

stamped 10:38 on page 27.

A

Q

A

Q

A

Q

A

Q

Could you please repeat that?

The e-mail that’s about midway through - - down the page.

Okay. The middle of the page?

Yeah, in the middle of the page.

Right.

It’s time-stamped 10:38 a.m.

Okay.

And in that e-mail are you requesting additional

information and explaining why that is relevant information?

JUSTICE:

MS. BIRD:

JUSTICE:

Well, it pretty well speaks for itself.

I think so.

Could it be read any other way, Dr. Graham?

A

No.

MS. BIRD:

Okay. Thank you. I apologize. I’m also trying to

make sure that we maintain a - -

JUSTICE: Sure. I understand.

MS. BIRD: - - record as well, and so you’ve taken into

Q

account certain things about the velvet and the valuation of the

velvet. Did you seek any other - - in your report you suggest that

where else did you receive or attempt to obtain information related

to the velvet prices?

A

Q

Velvet prices or velvet sales?

Or velvet sales.

Page: 86

A

I had a conversation with Dr. McLane of the Battleford

district office that I was looking for receipts.

Q

A

Okay.

‘Cause - - ‘cause I know that velvet is basically sold

overseas, and export certification is required.

Q

Right.

A

And if they’re in the velvet business, I’m sure they sell

theirs through the same buyer as everyone else in the province, so -

Q

So - - pardon me?

A

So an export document would be required, whether it was

for the entire assembly at another district or whether it was being

made here. I didn’t know that, and Dr. McLane volunteered that

information to me - -

Q

A

Q

Okay.

- - that they had sold 4,000 pounds, I believe, in 2013.

And what did you - -

JUSTICE:

So he gave you this information verbally?

A

Verbally.

JUSTICE:

All right.

Q

MS. BIRD:

And what did you understand from Dr.

McLane they had purchased it for per pound or sold it for per

pound?

A

Q

He didn’t have that information at all.

If you could just take a look at your report there, you said

that it was 4,000 pounds at how many dollars per pound? And I

appreciate it’s been perhaps a year and a half since the report was

written.

A

Q

A

This is still 027 or my report?

This is your - - your report. I apologize. That’s at - -

It’s 4,000 pounds, I believe, at $30 a pound, for $120,000.

Page: 87

Q

Okay, and so you sought out that additional information - -

or actually you said that Dr. McLane had volunteered the

information, but did you seek out any other information other than

the information that was provided by Willow Hollow?

A

Well, like I said, my initial meeting, I’ve seen other

situations where people have sold velvet. They get a piece of paper

with the weight of the velvet on it, and so there’s obviously

paperwork provided.

Q

And in review of Willow Hollow’s information did you

also - - if we look at A-1, tab 7 - - that’s the black binder again, Dr.

Graham - - the very first page, that’s the Alberta Elk Commission.

Did you review that information that had been provided by Willow

Hollow as well in terms of what they said about velvet and the

prices?

A

Q

Well, I expect I had looked at it, correct.

But you reviewed all of the information that was provided

by the Appellant.

A

Well, regards to -- there was never a receipt for the total

weight sold. They provided this, and Randy talked about it at our

initial meeting, about velvet, I believe, and how it increased quite

significantly over the last number of years.

Q

And can you - - based on the information that Willow

Hollow did provide in terms of the average weights that was

attached to Dr. - - Mr. Wehrkamp’s report on March 10th, can you

value or assign a fair market price for velvet based on just average

weights for individual -- or not even for the individual animal but

for the average year of that bull?

A

Q

You could get a -- I think a good estimate if you - -

Just based on Mr. Wehrkamp’s information, like just based

on the average weight of the information - - like of the average

weight of the velvet?

A

Well, if you knew approximately how many animals were

contributing to that - - the velvet produced that year.

Q

A

Did you have that information?

Well, I basically got the information from the slaughter

figures that were sent of the animals that were depopulated. There

was 266, I believe, animals that could have contributed to the

Page: 88

velvet. I believe I went from three years and up, and I think that

approximately it was 200 plus, in around 200, 200 -- 200 animals,

divided that into the 4,000 or into the 4,000 pounds, so it came out

to about 20 pounds, which was comparable to what Mr. Wehrkamp

had provided me in terms of averages- they had that year, so it was

in the ballpark.

Q

In terms of your meat prices or your meat values that you

assigned, you had said in that initial e-mail - - I think we had

looked at that - - it was going to be approximately $7 per kilogram,

and you were - - and you had stated that you obtained prices from

where, from - -

A

AWAPCO.

Q

AWAPCO? Okay, and that were their 2013 prices at

AWAPCO; do you recall?

A

I did phone them. Do you have what tab my report is

under?

Q

That would be tab 122. Page 3 and 4, that’s your report,

and that’s Exhibit R-1, but if we’re looking at AWAPCO prices for

2013 - -

A

Q

Right.

- - I think we can also - - and specifically for Willow

Hollow, you can also find that information at Exhibit A-1, which is

the black binder, and we are in tab 2, page number - - page

numbers I should say pages 64 through to 68, and if you look at

page 64, there’s an e-mail there, and the e-mail is from Bentley

Brown to Randy Wehrkamp, and attached to the next page and for

the next pages on, those are Willow Hollow Game Ranch’s 2013

AWAPCO prices that they received, correct, from pages 65, 66

and 67?

A

Q

Correct.

And at page 68, what year was that? That’s 2011 prices,

and so 2011 prices are 7.10, is that your understanding, $7.10 per

kilogram for the hot hanging weight? That’s at page 60 - -

A

That’s what it says, correct.

Q

Okay, and so you ended up assigning a value of how much

in your final report? And that’s again tab 122.

Page: 89

A

It looks like I’ve just assigned a slaughter value relative to

the date of slaughter, which was around March, I believe, 13th and

14th of 40 - - of ‘14.

Q

Okay.

A

Yeah, 14th to the 27th of 2014. I could divide that out and

determine, you know, but whatever - - I did talk to Cindy and

asked her what meat prices were for that particular day.

Q

A

Q

A

And so how much did you assign per kilogram?

Well, I know I assigned sixteen seventy-five per bull.

Well - -

So how -- in brackets it says, AWAPCO slaughtered

average value from March 13th and 27th slaughter dates. So I - -

basically I went through the returns that were filled in, I guess, or I

accessed - - I’d almost have to sit back and think on this, how I got

those values. I know I did talk to Cindy. I got an average value of

weight and multiplied the weight by - - the average dressed meat,

multiplied that by whatever Cindy provided and came up with the

sixteen seventy-five and added that to the $700 for the velvet,

coming up with a composite value of twenty-three seventy-five for

a velvet/meat bull.

Q

Okay, and did you - - did you determine - - you said that

you determined it according to AWAPCO’s prices for 2013?

A

Q

A

Q

I did.

And you would confirm that.

I did.

So would you - - if we were to base - - and I’m not going to

try to do math here. If we were going to do the math, does seven

fifteen sound like --

A

Q

A

Oh, it was at least seven fifteen.

Okay.

Yeah.

Page: 90

Q

So you were providing the AWAPCO prices for 2013.

Were you also taking into account that previous compensation you

did with Forjay as well?

A

I did the same thing with them. I basically phoned Cindy,

got that information, multiplied by the average weight -- or dressed

weight and come up with a slaughter value - -

Q

Okay.

A

-- dollar-wise. I added it to the velvet and got a value for a

velvet/meat bull.

(Transcript of hearing, pp 267-284)

[173] Dr. Graham also explains in detail why he could not accept WHGR’s information on

valuation:

Q

Now, the -- the way in which that Mr. Wehrkamp and

Willow Hollow have set out the way in which they think that the

valuation should have occurred and what we know of the

information that was provided in terms of the price lists as well as

those invoices and receipts as well as then any other accompanying

documentation related to it, is it possible - - given the amounts that

were being asked for and claimed by the Appellant, Willow

Hollow, is it possible to reach those numbers simply on the

information that was provided?

A

Q

A

I couldn’t - - I could not do it.

What did you require more of, if anything?

It all started with the profiling of what we had for the herd,

the whole profile, how an elk on one premise is not an elk

on·another.

Q

A

Okay.

You can show me some sales that you have been selling

hunt bulls on a regular basis, invoices to prove it. Sure, they’re

hunt bulls, and you can basically assign a proportionate number of

animals as hunt bulls on a farm. If you’ve got no receipts for a hunt

bull, how could you assign a hunt value to it?

Page: 91

Q

And, in fact, when you were provided with receipts that

were specific to the animal, you assigned, for - - for example, for

SNOR, which is the - -

A

Right.

Q

Right. So for SNOR 901W, you did assign a maximum

value.

A

I did.

Q

Okay, and if you had received some type of documentation

going forward in relation to the animals that were depopulated,

could you have possibly, you know, looked at the way that Willow

Hollow was valuing their animals, and if there was accompanying

documentation related to the animals specifically could you have

done more in terms of the values that they were asking for?

A

Q

A

Q

Not without receipts.

But I’m saying that if you had invoices, if you had - -

For sales off the farm?

Correct, or for hunts or for anything really more than what

you did receive, could you have gotten closer to what they were

asking for?

A

Could have. I mean I could have been more specific on the

proportion of animals on the farm that were basically, you know,

hunt quality.

Q

A

Okay.

And the receipts would give me some indication, you

know, what the wholesale value of that hunt bull was and then

from that determine what was left for hunt velvet bulls, and

basically how I did it was just meat plus velvet. That was pretty

straightforward.

Q

So I’m just going to touch lightly on Dr. Bischop’s report,

and you received Dr. Bischop’s - -

JUSTICE:

Just before you do that, if you’re going in that

direction - - this may come out later. Mr. Wehrkamp explained to

us yesterday that those receipts were not available, I think,

principally because of the block purchase arrangements that had

been entered into when the animals were bought, and so you

Page: 92

wouldn’t have receipts for individual animals, and he felt that that

had been explained to you. Was that - - were you told that?

A

At that time, no.

JUSTICE:

Okay. So you don’t -- you knew nothing about the

block purchase arrangements that had - -

A

Well, later on in the discussion maybe with a -- one of the

telephone calls with Mr. Wehrkamp or maybe even in one of the e-

mails -- I can’t recall - - that basically animals were purchased

through a broker - -

JUSTICE:

-- and that as such, the receipts weren’t available.

JUSTICE: Okay.

Those are the hunt bulls - -

Okay.

A

JUSTICE:

Right.

A

-- for sale –

JUSTICE:

Yeah.

A

- - not so much the hunt bulls for purchase.

JUSTICE: Right.

That’s what I was looking for, the purchase prices of bulls.

A

The sales was -- well, it was part of it because when you sell a

hunt, it’s a retail.

JUSTICE:

Yes. Okay.

A

I was looking for purchase, the wholesale prices.

JUSTICE:

Okay, and so, yeah, we’re talking about the

remaining animals after the others are hunted out, right?

A

Correct.

JUSTICE: And so he told us that, look, we can’t give you

receipts for those because they were part of a block purchase. You

know, there’s no -- there’s no - - an animal, I guess, doesn’t have

an individual identity.

Page: 93

A

It wasn’t a block purchase. It was a block sale.

JUSTICE: Block sale.

A

Yeah, it was a retail sale. I was looking for the block

purchase of the bulls --

JUSTICE:

-- that were eventually going to be sold through the broker.

JUSTICE: I see. Okay. All right, but you knew about - - before

Okay.

A

you actually did your final report, you - - you were then -- you’d

had this exchange with Mr. Wehrkamp.

A

I was aware that the hunts retailed were through the broker.

JUSTICE: All right. Okay. Thank you.

MS. BIRD: And perhaps just to follow up from Justice

Q

Russell, but in terms of we had received evidence from Mr. Weber

yesterday in relation to a group of animals that had been sold to

Willow Hollow, and several -- or a number of those had been

found to have been also depopulated, so, for example, if you had

been provided with even the receipt of sale or purchase of those

animals - - because it did happen so - - so quickly between, but had

you been -- had you received that type of information could you

have cross-referenced all of the animals that you could with those

that had been depopulated on that cervid movement permit?

A

Right.

Q

Cross-referenced that and come to some picture or idea of

the class of animals that they were purchasing even in that one --

A

You could have because the purchase indicated, I believe,

was 34·male animals January of - - end of January 2013. If you

take the identifiers on the cervid movement permit, you can go to

the kill sheets or the kill sheets as well as the animals were

identified prior to leaving the premise to go to slaughter, so you

had basically duplicate sheets of information, cross-reference what

was killed against the cervid movement permit, you can - - you

could -- you could determine how many were on the farm. Well, if

there was 34 and you found 15 that were part of the depopulation,

well, 19 are left. Well, out of the 19 that are left, what happened to

them? Well, some of them could have gone to the hunt farm. Some

of them could have been, you know, basically sent to slaughter. So

you have - - basically you have your hunt. You have your

Page: 94

slaughter. Some could have been kept -- even kept for velvet, but

they would have been part of the depopulation, and that’s why they

may have been kept, so give you some idea, you know, of the

composite makeup of possibly the herd - -

Q

A

Okay.

-- with that particular - - and there was another one there as

well basically the same month, end of January of 2013, basically

all males, and no receipt was available for that one.

JUSTICE:

But you’re talking about the cross-referencing that

could have been done. Did you do that cross-referencing?

A

I did some cross-referencing against the compensations.

Well, we pay against the compensation sheets that basically

compensated for the animals that were destroyed, and I did, I

cross-referenced, reconciliated the cervid movement permit, some

of the animals with both permits and found from both permits

animals were ordered destroyed.

JUSTICE:

And you did that cross-referencing, and what did it

tell you in terms of your valuation approach?

A

Well, basically the ones that weren’t there obviously within

the year, my assumption is they - - probably some could have gone

to slaughter.

JUSTICE:

Right. Okay.

A

Some could have gone to the hunt farm, and the rest that

were still there, more than likely if they were still there, if they

were viable as a slaughtered animal - - not a slaughter animal, as a

velvet bull, they would have kept it until maybe it developed into a

hunt bull, and at that time they could have moved it. If not, the

velvet production didn’t warrant keeping it around, then they

would have sent it to slaughter at that time, so it’s a continuing

dynamic.

JUSTICE:

Yes. Well, that was - - that dynamic was taken into

account in your evaluation.

A

Well, other than the sense I knew there was a percentage of

each, and that’s what I was trying to determine, percentage of each.

JUSTICE:

Right.

Page: 95

A

That’s why I asked for the - - you know, a profile. The

profile you get through the reconciliation of the permits with the

compensation forms, but you can also get - - the receipts will give

you an indication too as well.

(Transcript of hearing, pp 284-291)

[174] Dr. Graham explains why he rejected Dr. Bischop’s evaluation contained in

Dr. Bischop’s report:

A

I read it, but he had a qualifier at the end of the report.

Basically there was no - - the numbers he used was basically

reference to what was -- from Randy, I believe, and, you know, but

they weren’t substantiated by receipts to really validate them, I

guess, and the receipts were probably contrary and maybe discredit

his report.

Q

And his report is at tab 122 of R-1, and that’s at page 6

through to 11, and I apologize if you went over this. So you did

consider some of the information within but also with an

understanding of his -- his qualifiers in relation to --

A

Q

A

Q

Correct.

-- the information?

Yeah, the - - I did.

Okay. All right, because it certainly - - and we’ll - - we’ll

get into this report a little more down the road, but in reviewing the

report, what was -- what was your initial reaction to it or your

initial thoughts on - - on the - - the assistance that this report could

provide to you?

A

Well, I was just a little uncertain how some of these values

were attained, you know, starting with 2001 moving all the way

down to 2010. At that time I think Clarence was basically saying

all I know is in that herd were hunt quality and breaking down - - if

that was the case, if there was proof to such being the case, this is

how he would have valued according to ages, saying that the older

you are, the more likely you are a hunt pull and a better quality, but

at that - -

Q

Sorry. Justice Russell, did you have --

Page: 96

JUSTICE:

No, I’m just looking at the significant points of

review, number 2, where you say: (as read)

Dr. Bischop’s assigned value of 4,800 is premised

on the fact that the entire herd was made of trophy

bulls.

Do you see that, Dr. Graham?

A

Which page?

JUSTICE:

review.

It’s on the second page, I think, significant points of

A

My report or his report?

JUSTICE:

Well, you’re commenting upon his report, I think,

and you’ve signed this - - this is May - - your May 2nd, 2014,

report. It’s the - - in the - - it’s on the - - if you have it open, at tab

122.

A

122?

JUSTICE:

Okay. Okay.

JUSTICE:

Yes.

A

Then if you turn the page - -

- - you’ve got significant points of review.

Paragraph number 2.

A

Okay.

JUSTICE:

A

Okay.

JUSTICE:

A

Okay. Yeah. (as read)

Dr. Bischop’s assigned value of $4,800 for the hunt

herd is premised on the fact that the entire herd is

made up of trophy bulls. I asked Willow Hollow,

Mr. Wehrkamp at least three separate times for

receipts or documentation to validate that this is the

case.

So that’s basically, you know - - that is -- that report was based on

-- the fact that they were all hunt trophy bulls, and that’s -- that’s

where I disagreed.

Page: 97

JUSTICE:

And your reasons for thinking the entire - - he used

trophy bull for the entire herd was what again? You came to that

conclusion because of what?

A

The values he had assigned.

(Transcript of hearing, pp 291-294)

[175] In cross-examination, Dr. Graham confirmed that he had “Minimal experience when it

comes to compensation” prior to the WHGR evaluation. He also confirmed that CFIA had not

provided him with any training in evaluations.

[176] He confirmed that the written agenda for the March 5, 2014 meeting was not provided

until March 11, 2014.

[177] As regards the information of values provided by WHGR from source farms, the

following exchange is important:

Q

Okay. Is it also correct that the genetics are in some ways

exclusive to certain farms?

A

Q

I would expect so.

So it would be fair, then, to assume when we indicated on

that report that there were genetics from farms that were of higher

value, mid-range and average or lower value that those farms that

we indicated, such as the Friedel farm, would be of superior

genetics.

A

You had listed - - you had listed them three columns,

highly productive, medium and average.

Q

A

Q

Correct.

It was your assessment, Randy.

Exactly. The question - -

Page: 98

MS. BIRD:

Perhaps it would be helpful to have at least the

pages in front of Dr. Graham.

JUSTICE:

Okay. Let’s -- that might help. Should we look - -

can you identify where it is?

MR. WEHRKAMP: Sure, absolutely. That is tab 4 in the black

binder. The purpose of the question is because the key - - one of

the key elements - -

JUSTICE:

MR. WEHRKAMP: Correct.

JUSTICE: Yes, that list.

Let him just - - this is on page 2, right?

Q

A

Q

A

Q

MR. WEHRKAMP: Have you found it, Dr. Graham?

I do.

Okay.

I have, yes.

The purpose of the question is because if you’re going to

determine market value, replacement value, fair compensation,

whatever phrase you would like because they are somewhat

synonymous, is there not a requirement, then, to have an

understanding of genetics of certain animals and groups of

animals, regardless of whether they're block purchased or

individually purchased?

A

That would help.

Q

Okay. So what ownership does CFIA have in obtaining this

information?

A

Similar to what you said yesterday, you have an industry,

private treaty. No one knows what the other’s doing. There’s lots

of information. You don’t have it. The government don’t have it.

So you come to me and say, yeah, this is what it is. You've got

highly productive, medium, average. ‘Cause you’re saying so?

Q

The - - in the case of this particular document, those are

bulls - - those are producers that have vast experience. They have

competed in antler competitions. They’ve done exceptionally well,

and, in fairness, we would absolutely agree that not all elk are

Page: 99

created equal. So the purpose of the exercise is to actually share

information with CFIA - -

A

Q

A

Q

A

Right.

- - to assist in the process.

Right.

It’s as simple as that.

Yeah, I understand.

(Transcript of hearing, pp 304-306)

[178] In cross-examination, Dr. Graham also rejects the accusation that he mischaracterised the

business of WHGR:

A

Well, reading from my report at tab -- your tab 122 - - our

122, the report says Willow Hollow game farm elk herd consists of

a meat, velvet and a hunt component, so that’s basically how I

assessed them at.

Q

A

Q

A

So first meat, second velvet and --

No.

-- third hunt?

Basically that’s what I was trying to strive for, some -- you

know, some ability to be able to divide it meat/velvet plus hunt.

Q

Would it not make sense to list the primary aspect of the

business first rather - -

A

Q

A

To be honest - -

Is that not normally how it would be done?

That’s the way I listed it. I’m not sure I did it - - I guess I

could have listed it the other way. Does that mean the hunt was the

primary component? I think eventually long term if they could

have every animal bought specifications to the hunt bull and sold,

that would have been great. I understand that, but to get there, not

all those bulls are going to get there, Randy. The ones that don’t,

Page: 100

the velvet, you keep them. The ones that don’t even velvet, you get

rid of. It’s a continuing dynamic.

Q

The - -

JUSTICE:

Just let me follow up on that. So at the time of your

evaluation, Dr. Graham, you couldn’t ascribe a primary purpose to

Willow Hollow? I mean you knew it did three different - - three

things.

A

Correct.

JUSTICE:

But in your own mind, you didn’t give primacy to

any of those?

A

Not from what they had provided me. They gave me a

game plan, which is basically they wanted to get to where they

were before ‘cause hunts, you know, that’s their - - I assume they

wanted to get to, but they’d only been back in business since ‘09,

so that’s six years, so they were buying, culling, buying, culling,

buying, culling, trying to get - - you have to remember there’s

females involved in this as well. They wanted to get to a point

where they didn’t have to buy hunt bulls that they could no longer

access or they could produce them. That would increase the

economic advantage if you could produce them as opposed to

having to buy them.

JUSTICE:

I mean Mr. Wehrkamp’s evidence was that, you

know, you basically characterized Willow Hollow as a meat farm.

A

Q

Not at all.

MR. WEHRKAMP: And yet the valuations, we would

suggest, reflect that.

A

It’s -- if you had provided me more evidence that there

were more hunts coming off, you would have got a greater

component to the hunt, less to the meat, and the overall composite

value would have been higher.

Q

We provided you with information that there was about

$275,000 in hunt sales in 2013. We provided -- you had

information that --

A

Q

When was - -

- - there was $120,000 --

Page: 101

JUSTICE:

Once again, perhaps could we take a look at where

that was provided and so that it jogs Dr. Graham’s memory?

MR. WEHRKAMP: That was verbally provided by Bentley

Brown at - - at the meeting.

JUSTICE:

I see. Okay.

Q

MR. WEHRKAMP: Documentation of - - of the hunts

that were sold were also reported in tab number 6, which in the

charted area we referenced - - Dr. Graham, have you found it?

A

Q

Yeah, mature bull value -- valuation.

Mmhmm. So we provided you with information on the size

of the bulls that were killed - -

A

Q

A

Q

Correct.

-- were hunted.

Right.

We provided you with a fair market value - - valuation of

the bulls at that time.

A

Correct.

Q

We provided you then with a percentage of hunts by

category or size.

A

Q

Right.

And we’ve extrapolated a number of bulls that were there.

By your own testimony - - that’s clear?

A

The top part at the top, historical five-year average, number

of bulls, percentage of hunts, out of the five-year average value of

the bulls as part of the hunt, total replacement cost. Is that what

you’re talking about?

Q

That’s the line. Actually I just stopped at the - - one, two,

three - - fourth column, which is the value of bulls as part of the

hunt, and the values that are shown there are actually the values

relative to CFIA compensation, not to the total value of the hunt.

A

Q

Okay.

But you’re - - you’re clear with all of that?

Page: 102

A

Q

I think I understand what it’s saying.

So there is information on the number of hunts. It’s already

agreed that there was on average 31 hunts per year.

A

Q

A

Q

Correct.

30.8 I guess is the true average.

Yeah.

By your own testimony - - and we’ve acknowledged and

agreed that $120,000 more or less velvet sales in dollars were sold

annually.

A

Q

A

Q

Right. 2013.

Correct.

That’s all I can talk to.

Correct. And we know that in 2013, $90,000 or less were

sold in meat sales, around $90,000, correct?

A

Out of - - you’re saying that it was verbally brought up at

that meeting. I don’t recall that, but - -

Q

That information is provided by the 2013 receipts for meat

that are in this booklet as well. I believe that’ll be tab 11, which

basically totals the cull program, and the reason they’re included is

- -

JUSTICE:

Let’s just -- let’s go to tab 11 and see if Dr. Graham

is aware of this information or was aware of this information.

A

Q

A

Q

A

Q

To be honest, I’m not sure if I was.

MR. WEHRKAMP: Okay.

I’m not sure.

Okay.

Yeah.

That -- that’s fine if you’re not sure, but the point is, then,

that this represents the animals that were culled in 2013, and the

total sales represent about $90, 000. So the value of meat sales is

really the smallest value, the least income for the farm.

Page: 103

A

On that particular year.

JUSTICE But did you know that?

That $90,000, no, I didn’t know that value.

MR. WEHRKAMP: Okay.

A

JUSTICE:

These figures, the tab 11 figures that you’ve given

us from AWAPCO, that was part of some package that you

provided?

MR. WEHRKAMP: These documents were not provided in hard

copy to Dr. Graham.

JUSTICE:

Okay. So how was the information conveyed to

him? I mean in your evidence - - you can’t give evidence now, but

in your evidence how did you tell us that the information about the

meat, the $90,000 was conveyed to him?

MR. WEHRKAMP: It was conveyed to him at the March 5th

meeting.

JUSTICE:

Verbally. Yeah. All right. I’ll take a look at that.

Q

MR. WEHRKAMP: Thank you. The point is that for

valuation, from a business perspective the commodity that

produces the largest income by logic and common business

practice is considered the primary business, the primary aspect of

the business in any invoice, regardless of whether it’s cervids or if

you’re selling cars or fixing cars. Is that a logical statement?

A

Q

You’d have to repeat that again, Randy.

Okay. Sure. I’d be happy to. If you have a business that has

various commodities that you deal with and sell - -

A

Mmhmm.

Q

-- the aspect that sells or has the greatest revenue to the

business would be considered both by CRA and common business

knowledge practice to be the primary aspect of the business.

A

Q

At that time.

Correct. So we’ve heard testimony that, in fact, sales were

in the hunt aspect of it, and the information was provided at our - -

Page: 104

at the initial meeting on March 5th on what the volumes were. That

information was provided to you, agreed, at least verbally?

A

If it was, I have no recollection of it.

(Transcript of hearing, pp 307-313)

[179] Another important exchange occurred when Dr. Graham conceded that he did not take

the information on cervid movement permits into account:

Q

You’ve mentioned that you needed the receipts to

determine what type of bull, velvet, meat or hunt, was being

purchased on the receipt. You’ve indicated that if you were to get a

receipt for a block of animals that you would be able to determine

that.

A

I think you could get a - - get a general idea what you were

getting if you basically have a receipt, the invoice stapled to it

where it itemized, you know, what you’re getting age-wise, sex-

wise and a total at the bottom.

Q

A

Q

A

Q

But we’re really concerned with bulls - -

In this particular - -

- - in this compensation.

Yeah.

On a block receipt, on a block purchase - - let me explain

what a block purchase is. A block purchase is a farm going to

another farm and buying that group of bulls. It’s not an

individualized list. Agreed?

A

I understand that, correct.

MS. BIRD: I just want to make sure that we’re clear that - - and

I can’t recall exactly what -- to the word that Mr. Wehrkamp

provided in testimony, but I want to be sure that the questions are

going in terms of questions rather than at first I thought maybe he

was attempting to put some more evidence in.

JUSTICE:

Well - -

MS. BIRD:

It was a statement, and - -

Page: 105

JUSTICE:

MS. BIRD:

JUSTICE:

Well, as you can see - -

Yes, but then he answered - -

- - that wasn’t the case. He’s just asking him

whether he agrees.

MS. BIRD:

JUSTICE:

Yeah.

He can do that. Go ahead.

Q

MR. WEHRKAMP: So if that’s the case, if you have --

whether it’s a receipt or not, if I tell you today that I just purchased

100 bulls, what did I purchase?

A

Well, you would have to have a cervid movement permit,

Randy.

Q

A

Q

A

Q

What does the permit tell you?

It tells you the age. It tells you the sex.

You have those, do you not?

We do.

So you had that information. You had all of the cervid

movement permits for the Brown Willow Hollow game farm.

A

Q

A

Q

Correct.

So you had that information already.

Correct.

Okay. The only thing - - so you knew the animals that were

purchased by Willow Hollow --

A

Q

Correct.

- - you knew where they came from. You knew·how old

they were. You knew what sex they were.

A

Q

A

We did.

You knew if they were indicated as breeding or hunt.

Well, working for the government, I know quite often when

it comes to breeding, hunt or slaughter - - and I’ve seen it in my

Page: 106

own office - - people don’t get that classification necessarily

correct.

Q

So there’s a problem – there’s a possibility of error is what

you’ve saying.

A

The reality is is the situation when you get - - let’s say 34

males. You bring them in. You determine what you get. You

determine -- break them up. If they’re going to look like they’re

going to have potential, you keep them for velvet, like I was

saying. If they’re even better, you keep them as a hunt bull. The

ones that aren’t so good you send to slaughter.

Q

So if you - - if you have that information, which you’ve

agreed that you do, you then have the information that you

indicated earlier that you need to make a determination of whether

or not they’re hunt or at least a good portion to indicate whether or

not they’re hunt - -

A

But you need the receipt to go with it, Randy, ‘cause if

you’ve got a - - let’s say 34 and 20 of them are hunt-quality bulls,

well, 24 - - or, yeah, 24 grand, that’s 80 grand, but if they’re not

worth a lot and they’re all meat bulls, well, they’re not 80 grand.

It’s considerably less. So you have some idea what you’ve got as a

composite.

Q

But you also have - - but - - fair enough, but you also had

and have indicated you needed the information that’s on the

movement permits to assist in your determination. That was the

key element of - - of your assessment. You have that information.

A

Well, the information is there, but if you have it -- and you

should have it. Any businessman, what he should be - - I’ve seen

them, you know, write paid in full, and they’ll write down on that

receipt how much was paid and they’ll break it down according

how many of each, call it breeding bull, call it a hunt bull, call it a

velvet bull, depending on what classification, that’s the value they

put against it, and it’s totalled at the bottom.

Q

I’m not even sure of how to respond to that statement

because it’s - -

JUSTICE:

The information on the cervid movement forms, did

you, in fact -- and the classification that was given, did you, in fact,

take that into account or did you say, well, you know, you can’t

trust this and so you left it out of - -

A

Well, I knew those permits were there.

Page: 107

JUSTICE:

Yes.

A

And I knew animals within the last year were coming on,

but the animals had been coming on for the previous six, and they -

- you know, as I described earlier, some were basically kept for a

year to see where they were, sent to slaughter. Other ones are

younger, looking good and they kept as a velvet bull, so it was a

continuing process.

JUSTICE:

But, yeah, the receipts would have given me some idea.

JUSTICE: You know, I realize you would have wanted the

Yes.

A

receipts, but it’s being suggested to you that you had all the

information you needed and you could have taken the cervid

transfers into account. Could you or couldn’t you? Was that

information you could have used or did use?

A

No, I didn’t because a hunt is a general term. All a hunt is

meaning you come to an agreement with someone that wants - -

with someone that’s willing to hunt a bull that you’re able to

provide at a certain price. Now, whether that’s a 500-inch bull or

it’s a 250-inch bull, you come up with an agreement.

JUSTICE:

calculation.

All right. So that really played no role in your

A

No, it didn’t.

(Transcript of hearing, pp 317-321)

[180] On hunt evaluations, the following exchange is important:

Q

A

Q

Okay. What’s a 400-inch bull worth on the hunt?

Retail or wholesale?

Wholesale. We’ll go with retail. We have -- we have the

retail numbers. We’ve already discussed those.

A

Yeah, we talked about it earlier today. I think I - - I said I

chose 400.

Q

Mmhmm.

Page: 108

A

Q

And I - - I assigned 4,500 bucks to it.

Why would you not - - just following up on that particular

question, why would you use an average when you have - - the

farm’s records was provided to you - -

A

Q

Correct.

-- of what the 31 hunts averaged and that they were over - -

you had that specific information on the farm. It was shared with

you.

A

Q

Well, what tab is that under?

That’ s the evaluator’s report, tab number - - one would

think you would remember - - I would remember this. Tab number

6. It’s your bull valuation, the third page.

A

Q

A

The one that we were talking about earlier.

Correct.

So we’ve got 151. Can I stand, Your Honour?

JUSTICE:

Of course. Yes, go ahead.

A

151 bulls, so I take it divide by 5, that gives you basically

your 31 bulls; is that correct?

Q

A

MR. WEHRKAMP: Correct.

Okay. So these bulls are the ones that were basically hunted

out over the previous five years.

Q

Correct.

A

And the scores, you know, that they were scored at and the

total of 151, and then you gave a percentage of - - what percentage

of the overall made up those scores. Down at the bottom, you have

number of bulls by age. Those are the ones that were left on the

farm that were part of the depopulation, correct?

Q

Well, let’s just focus, if we would, on the top portion and

leave --

A

Okay.

Q

- - the total number of bulls for a minute because we’ll get

to that.

Page: 109

A

Good enough. So what you’re saying is these are the bulls

that you hunted over the previous five years. I feel like I’m cross-

examining now.

Q

Frankly so do I.

A

Anyhow, how would those values for the previous five

years have got anything to do with the bulls that were

depopulated?

Q

They have everything to do with that, but firstly, would you

agree that this is a reasonable chart that·gives us clear picture of

the past five years.

A

It gives a clear picture of the bills you hunted off the last

five years.

Q

A

Q

A

That’s exactly what I’m asking. Thank you.

Okay.

And yet you chose to use a valuation for a 400-inch bull.

Yeah, I keep coming back to the point. What you -- the past

doesn’t have nothing - - you keep buying them. It’s not like you

were in the - -in the - - like the Willow Hollow was in business for

11 or 12 years with the same cows, they knew what they were

coming up each year, they had that same genetics, they created the

genetics, there was more consistency. Here you were buying -- you

were culling, buying, culling. That consistency wasn’t there from

year to year, so how can you say since you’ve got the last five

years, the next five years is going to be the same? You can’t.

Q

A

It could be more.

It could be more, it could be less, so I took in-between and

took 400.

Q

It seems to me that accuracy is determined by using

historical information that’s available and projecting into the

future.

A

Q

A

If the historical information is correct.

Okay.

That information is correct, but it --

Page: 110

Q

A

Okay. Thank you.

- - but you can’t over - - if you’re not - - if you’re not -- it’s

correct if everything else is equal. In this case everything else

wasn’t equal.

Q

A

Q

I can’t - - I don’t want to debate that same point - -

Okay.

-- with you. We have historical and just I’m -- just to

conclude this portion, let me recap what I’ve heard I believe. Have

five years of actual data that isn’t being applied moving forward,

but we’re using an arbitrarily-chosen score of 400 as an average. Is

that what you said? Yes or no. That’s - -

A

That’s what I -- I did, correct.

(Transcript of hearing, pp 322-325)

[181] On the key issue of when a bull should be considered mature enough for the hunt market,

the following exchange is important:

Q

At what stage do you consider a bull to be mature and

mature and appropriate, then, for the hunt market?

A

Well, whenever he gets the -- I guess whenever he gets the

measurements that would allow him to be considered a hunt bull.

Q

use?

And what is the minimum measurement that you would

Myself? Well, you can hunt - - like I was saying, you can

A

hunt any bull you like as long as you get - - you know, they get so

far down on the scale, I mean it’s not much over meat price, so

why bother?

Q

Why - - is that a decision for you to make or is that a

decision for Willow Hollow to make?

A

I’m not making the decision. I’m just saying that –

Q

Well, you’re asking the question why would you bother,

and - -

Page: 111

A

Q

No, I’m just saying - -

-- I would simply like you to answer the question why you

would bother.

A

You asked the question of the determination of what I

considered what age a hunt bull would be.

Q

Correct.

A

But whatever age you can get a bull that’s someone’s

willing to buy.

Q

Okay. So CFIA, you have determined as the representative

and the chair and completing the report that is what age? You’ve

applied in your report - - you’ve indicated that you are applying to

- - and compensating how many bulls for - - considered mature and

appropriate for the hunt market?

A

Q

A

Q

15 percent of 200 I think it was.

Okay. That’s about 31 bulls for the purposes - -

Correct.

So you did recognize the previous years, and you are taking

into consideration, even though - -

A

Well, it’s - - that’s pretty specific, the number of hunts. I

mean you can’t - - you can count the hunts each year, but you’re

basically saying what we did over the five years was basically

what’s going to happen coming up, but what you keep forgetting,

Randy, that each year they weren’t able to supply from the ones

they were buying to put into the hunt farm for their sales, so they

had to go out and buy hunt-ready bulls, so that basically gave them

the complement to put in the - - put in the hunt farm. They didn’t

really come out of - - they did come out of the 31, but they went in

what you already had. You had to buy them and out them into the

hunt.

Q

And you can confirm that? You’re confident in that

statement?

A

Q

A

I’ve got the - -

For all of the hunt bulls?

I think I could.

Page: 112

Q

A

Q

For all of the bulls that were hunted, you’re confident.

I’ve got a couple of them for sure.

Okay. You’ re absolutely right. We agree with you, Dr.

Graham, that some bulls are purchased off the farm, but those are

select bulls. Those are usually the large bulls, and they represent a

very small percentage of the bulls that are hunted.

A

I understand that.

(Transcript of hearing, pp 326-329)

[182] A significant difference of viewpoint was expressed by Dr. Graham over the importance

and the mathematics of culling WHGR’s herd of elk over time:

Q

MR. WEHRKAMP: … I’d like to spend a little bit of time

talking about sort of farm management practices and culling of

animals. You’re aware - - are you aware that Willow Hollow culls

animals annually?

A

I am.

Q

I think we agreed this morning that they purchase blocks of

bulls, bring them home, cull the meat animals and keep the animals

that are left as either velvet or hunt.

A

Q

Mmhmm. Correct.

Good. Is that a practice that you’re familiar with that you

would agree to, that culling is a normal practice of the livestock

industry, particularly in this case the elk?

A

Correct.

Q

Do you - - if you buy - - and I’ll give you the example and

ask you to -- to comment because we discussed this yesterday. If

you buy a block of animals for a volume price, a single price, not

individualized, take out bottom 27 percent because that’s what was

culled from the Willow Hollow herd in the year prior to, in 2013,

27 percent, so if you take out 27 percent - -

A

Mmhmm.

Page: 113

Q

- - of the animals, does that have an impact on the value of

the remaining animals?

A

Q

A

Q

A

Q

A

Q

Correct.

It would.

So the values would do what, go which way?

The ones that are left.

Would they increase or decrease?

In theory they should increase.

Okay. Thank you. Are you - - I’d like to draw the - - your

attention to this booklet, the small one. If you have it, section 118,

which is -- while you’re looking for it - - a three-page documented

- - document which was directed to yourself, an e-mail from

myself.

A

Q

Mmhmm.

And on the bottom there’s a handwritten note that says, No

receipts considered, meat/velvet. I think it says, Annualized cost of

maintenance and a question mark, and below that it says, Fail to

see where culling increases values of remaining animals. Is that

your handwriting?

A

Q

A

Q

It is. So you see - - okay.

But you just stated to us - -

Correct.

-- that it would have a positive impact, and here the

statement is you fail to see where culling would have any positive

impact.

A

Q

A

I’ll explain that.

Please do.

You’re culling off a certain percentage of animals each

year. You bring animals in. Some go to meat. Some remain in the -

- the herd as velvet. Some go to hunt, but once they’re there, you

bring some more in, so overall the average stays the same, Randy,

Page: 114

‘cause you keep moving in. coming back out, moving in, coming

back out ‘cause each year - - you’re taking off so many, but to

keep supplying the hunt herd, you may have to bring more back in,

so overall the average doesn’t change.

Q

I would suggest you need to check your math. If you have

100 bulls - - and let me give it as an example. If you have 100

bulls.

A

Q

A

Q

A

Q

A

Q

A

Q

Correct.

25 go out.

Correct.

That’s 25 percent of your herd.

Correct.

You have 75 left. If you bring in another hundred - -

Correct.

-- and cull out the 25 percent of that herd - -

Correct.

-- that - - that changes the percentage. It doesn’t remain at

25 percent on cull basis. Then you’re culling a lesser number. It

does - - it - -

A

If you’re at a continuous operation and you want to keep

the hundred -- in this case with the Willow Hollow, in the

compensation they were bringing in three-year-olds and two-year-

olds. These are the ones - - the first bunch that have come off their

farm from the breeding program. They’re coming in. You’re not

sure what you got. So you -- you -- the previous year you’ve done

some culling. You bring in the ones following in behind which

were part of the depopulation. You don’t know what value they are

‘cause they’ve only come in as two and three-year-olds, so the

overall average doesn’t change.

Q

I suggest your math is still wrong. I don’t understand how

that can be correct.

A

No, it’s not wrong. I thought about it last night actually.

Page: 115

Q

Fair enough. That’ll be a point that we agree to differ on,

then.

A

Q

Okay.

If you -- we’ve already given the example. I don’t have to

give it any more, but of the animals that remain after the initial

culled - - culled animals, right, that 75, following along with the

example for simplicity sake if we could - -

A

Q

Correct.

-- that single group would be worth more money than you

stated. The value would increase of those 75 animals.

A

75 animals are left. Each individual animal would have - -

would be considered a better animal ‘cause you got rid of the

poorer ones.

Q

A

Exactly. Thank you. Now, when we talk about hunt bulls - -

Correct.

(Transcript of hearing, pp 337-341)

[183] Dr. Graham also provided his view of the significance of a 6-year-old bull:

Q

- - we look at -- and you stated just before lunch that hunt

bulls are sold on the basis of score - -

A

Q

A

Q

A

Q

A

Q

Correct.

- - not age.

Well, it all depends on what age to get to that score, yes.

That’s -- that’s right. You’re correct.

Yeah.

But the·key point is score.

That’s my understanding how it works, correct.

Okay. So I’m curious, then, to know, when we look at

testimony from yesterday which indicated that the antler

competitions recognize an age as a mature age. We had a

Page: 116

discussion, I believe - - and I’ll ask you to confirm this, with - - on

March 5th with Dr. Bischop and yourself at Willow Hollow where

we presented the same information to you - - to you and Dr.

Bischop at that point, and Dr. Bischop agreed that six years was a

reasonable age to cut off as a mature bull. Do you recall that?

A

Q

I recall that.

Okay. So Dr. Bischop and yourself left. As your industry

expert, he left with the understanding - - an agreed-upon

understanding with Willow Hollow game farm, that that was the

cutoff point for bulls as mature.

A

Q

A

That’s what he had come to an agreement with you, correct.

Okay. Is that how he based his report?

I’d have to check the report, but he based values against

year of age. I think he - - I think that’s correct.

Q

Okay. Thank you, and in turn when we were requested --

because of that agreement, when the farm was requested to contact

other farms and source valuations, you’ll note in the documents

that have already been reviewed and if you need to look at them

again, they would be part of tab 6 in your black binder, which is

the receipts or the - - the replacement cost of bulls.

A

Which page was that, Randy?

Q

Just one moment. I’m not quite there myself. Pardon me.

That actually is not tab 6. That would be tab 7, not tab 6. You’ll

notice on both the -- on all of the - - on the Cosha Farm, the Elk

Valley Ranch farm and the Northwinds Farm that only ages in

replacement animals were shown to five years of age, and that was

based on the agreement that was reached at Willow Hollow on

March 5th with the industry expert representing CFIA and, we

would assume, yourself.

A

No. You may have had agreement with Clarence, but it

wasn’t with me.

Q

Okay. Would that not have been an opportunity to share

that information at the start of the process rather than let the farm

continue for a process that lasted until May 2nd when you have a

different requirement than what was agreed between the industry

expert and the farm’s expert as a reasonable way to proceed?

Page: 117

A

Well, what Clarence wanted was values of hunt bulls,

which you’re talking about starts at six years of age - -

Q

A

Correct.

- - which is fine. You provided those. That’s if they’re hunt

bulls. Our disparity here is how many are hunt bulls. That’s where

the disagreement is.

Q

So my question, then, to you is what is it, what knowledge,

expertise do you bring to this process that exceeds the knowledge

of the industry expert for yourself, the industry expert for the farm

and the farm owners who have operated that farm for 30 years?

A

What you’re saying is the older you get, you keep growing

and getting older, sooner or later you’re going to be a hunt bull.

That’s not the case. Some of them just never make it. You know

that.

Q

A

All bulls make hunt bulls. All bulls make hunt bulls.

As long as you have someone willing to grade. You don’t -

- all bulls don’t get to 400 inches. That doesn’t happen. Even I

know that.

Q

We are not - - a majority of the hunts are sold for bulls

under 400 - -

A

Q

Correct.

-- 400 inches. You’re absolutely correct in the sense that all

bulls - - if I heard you correctly that all bulls make hunt bulls. They

just may not be big hunt bulls, but all bulls - - is that correct?

A

If there - - any bull that you want out there, you can put it.

You can call - -

Q

A

Q

A

So in theory - -

- - it a hunt bull.

So in theory all bulls will make hunt bulls.

No. All bulls could be sold as hunt bulls if someone’s

willing to pay a price for it.

Q

So tell me the definition of a hunt bull, please.

Page: 118

A

A hunt bull is where you can have someone agree to pay

you a certain amount of money to hunt a bull.

Q

A

Q

Okay. Is there a minimum requirement by score?

It varies with the guy and the money he’s got.

So the answer is no. Is that - - is it - - I need a yes or no

answer to that question. Is there a minimum score that constitutes a

hunt bull?

A

Q

Not that I’m aware of.

So the answer is no. So in other terms, all bulls make hunt

bulls would be a correct statement.

A

All bulls can make hunt bulls at varying prices with scores

and inches on the racks.

Q

Thank you. That was -- that’s a key point because what

we’re looking at here is valuation by category of bull, and earlier

in your testimony, that’s not what you said. You said that some are

velvet bulls and some will only be velvet bulls and some will only

be meat bulls. The bottom is gone.

Q

A

Q

A

Q

What’s left is the upper end of that group of bulls.

Correct.

That group of bulls - - a bull that is six years old - •

Mmhmm.

- - if that’s a reasonable age - - and it was agreed at one

point that that was a reasonable age - -

A

Correct.

Q

- - to be a hunt bull, a bull that’s four or five will grow to

be a six-year-old bull.

A

Correct.

Q

In the case of your valuation, what you said and applied to

this was 31 bulls - -

A

Correct.

Page: 119

Q

-- based on the previous year were categorized as hunt

bulls. There was no allowance in your valuation for the category of

bulls that were growing in that would make - - that are five years

old, that are six years old. You chose arbitrarily 31 as a number,

and our challenge is an explanation as to why that constitutes a

reasonable number when, in fact, the only number that that is

based on is the hunt from the previous year - -

A

Q

Correct.

- - the number of hunts per previous year. It has no

correlation to the actual bulls that were on the farm. You’ve made

a number of assumptions - -

A

Q

A

Q

A

Correct.

-- and that’s all they are. Agreed?

They’re not assumptions.

In - -

The reality is you could take all those hundred bulls or

whatever they were, Randy, move them down to the hunt premise,

okay? Call them hunt bulls. Call them what you like. Will they be

hunted out as hunt bulls? If, you know, a guy’s got 30 - - or $2,500

and you’re willing to take 2,500, he’ll hunt it, take it out at $2,500.

Q

I’m not sure you’re in a position to - - to qualify - - I guess

I would ask you what your qualifications are to determine that that

bull is a $2,500 bull.

A

Well, he wouldn’t be much worth more than worth more

than a meat/velvet bull. Take a look at some of these things out.

Less than 300, some bulls, those prices are right down to meat

prices.

Q

But you can’t give me any and you can’t substantiate your

report in any other way than your assumptions and a report from

Darcy Lepowick.

A

I’m not taking Darcy Lepowick into account. You’ll have

to talk to Clarence about that. That’s not my --

Q

Okay. Okay. Fair. The point being that all bulls make hunt

bulls. Not only is it 31 bulls of the 260 odd bulls - -

Page: 120

A

Why don’t we just - - it’s all semantics. Let’s call it

hunt/trophy. Anything can be a hunt bull. If someone’s willing to

pay for it, great, but realistically they want the ones that are called

trophy bulls that are a little higher up the scale and they’ll pay

bigger money for.

Q

So bigger bulls are worth more money and smaller bulls are

worth less money, but they’re all still hunt bulls, and to the

individual who shoots or hunts that individual bull, regardless of

score is it not their trophy?

A

Correct. If that’s what they want to do and they’re willing

to pay for it, that’s fine, but what we’re trying to determine today

is how many bulls are hunt bulls and what price you want to put on

them. It’s just basically a percentage of the herd. That’s what this

is all about.

(Transcript of hearing, pp 341-347)

[184] As Deputy Assessor, I asked Dr. Graham how he had come to the conclusion that all of

the animals acquired by WHGR following the 2009 depopulation (other than those specifically

identified as otherwise) had been purchased at meat prices, and what he saw as the essential

disagreement over values in this case:

JUSTICE:

Thank you very much. I just have a couple of

questions myself, Dr. Graham. In the black binder at tab 2 page 81,

I’m looking at your second report - -

A

Correct.

JUSTICE: the third paragraph down, which begins, Willow

Hollow game farms, etc. You say: (as read)

The herd started in 2009 with the purchase of

females and males from at least 10 producers.

WHGF has provided no purchase receipts during

this entire compensation process - -

These are the words I’m interested in: (as read)

- - but did indicate they were purchased at meat

prices.

Page: 121

A

Correct.

JUSTICE: Where is that -- how was that indicated?

We started that meeting on March the 5th, ‘14, at 10:00 in

A

the morning. At 2:30 we were still discussing it, and basically I had

no receipts. At two or three different times I asked, you know, I

needed receipts, and Mr. Brown there basically indicated, We had

receipts but they’re mixed in with the tax filings, tax papers, it

would take some time to get them. I said, I’ve got the time, and

with that, nothing more was said, and I left - - I left the house.

After 4 1/2 hours it wasn’t going any further.

JUSTICE:

But you say they - - they did indicate that they were

purchased at meat prices.

A

Yes. Mr. Brown basically said. He said, They’re mix - - the

receipts are mixed in with the tax filings. I said, Well, I’ve got the

time. He said basically he said they were all bought at meat prices.

JUSTICE:

evaluation?

Okay, and you - - you used that information in your

A

You bet I did.

JUSTICE:

Okay. So that was the basis of your assumption - -

A

Right.

JUSTICE:

- - about meat prices. Okay. So just in terms of

summary for my benefit here, what do you see as the material

differences between the Appellant’s valuation and your valuation?

What does it come down to?

A

The difference is the percentage of animals that are being

deemed as, you know, actually hunt bulls that are actually being

hunted out and the ones that I deemed basically aren’t hunt quality,

and basically they basically assigned hunt-quality values to every

animal that was on the place other than the two and three-year-

olds.

JUSTICE:

Right, and that’s the difference with Mr. -- Dr.

Bischop’s report too.

A

Right.

(Transcript of hearing, pp 350-352)

Page: 122

Dr. Bischop’s Evidence – Highlights

(a)

Background and Experience

[185] Dr. Bischop is the provincial rabies risk veterinarian with Saskatchewan Agriculture. He

is employed by CFIA on “as-required contract.” He has worked in different positions within

CFIA between 1981-2012. He has worked with a variety of animals and has considerable

experience with elk operations:

A

Well, I’ve been exposed to many of them and for pretty

intense periods of time in a lot of them. There’s quite a range of

producers in terms of their backgrounds and the knowledge they

have of their animals. It’s been quite nice to see the progression of

the whole industry both in knowledge, equipment and handling,

improvement of the animals. You know, there’s -- there’s some

really dedicated people to the industry.

Q

A

And the industry has been around for about how long?

It was in the eighties that -- that it really got going, toward

the end of the eighties, early nineties.

Q

So that’s right around the time that you’re -- you’re starting

up in Yorkton.

A

Q

Well, in ‘81 I started, yes.

Okay. So elk operations, and if we’re talking specifically

about an elk farm, what do you understand is involved in an elk

operation?

A

Well, there’s a lot of similarities with other livestock, and

obviously some of them have to be breeding operations to create

more elk. People have different revenue streams based on what

their resources are and what their desires are. If they have land

suitable for hunting, they -- they may choose to include a hunt

operation, which diversifies their income. They -- they may simply

raise them for their meat and velvet, meat tending to be the final

obviously income from the animal. People sell breeding stock if

they have good enough animals and a good enough reputation. It

depends on the health of the industry as to how each segment does.

Page: 123

The elk prices go up and down. International trade restrictions can

greatly influence the value of the animals. We’ve been involved in

sending animals to Korea, antler to Asian destinations. You know,

we’ve seen most of the industry, embryo collection in the early

years even, not so much now, semen collection.

(Transcript of hearing, pp 357-359)

[186] Dr. Bischop has been engaged in depopulation evaluations of a number of different

species, including elk. He has done this as a sole evaluator in some cases and he has also taken

part in several team evaluation efforts.

[187] He has been involved in depopulating elk “seven or eight times.” He has been a sole

evaluator for elk “five or six times” and “at least twice” as part of a team, all prior to the WHGR

evaluation, in which he participated as the CFIA expert. He has, in the past, chaired elk

evaluations.

[188] Dr. Bischop was also involved in the Forjay Farms evaluation in 2013 that was chaired

by Dr. Graham. He believes that the Forjay Farms evaluation was completed about 4 months

earlier than the WHGR evaluation.

[189] Dr. Bischop regards the Common Procedures Manual as “a guideline to - - to ensure that

key points are captured in the method of evaluating animals for compensation.”

Page: 124

(b)

The WHGR Evaluation

[190] Dr. Bischop gave evidence about the difficulties of acquiring relevant information in

Saskatchewan and how he approached the process in relation to Forjay Farms:

Q

Okay. Do you know when the award, the final award for

compensation happened on Forjay?

A

No, I don’t. In preparation for that I had inquired of

industry people for actual sales numbers, and then I got some. It --

the hunt farms that only can show you how many dollars they’ve

received for a hunt is not really an accurate measurement of the

animals’ value.

Q

So the information that you receive in terms of outside of

what is available to you through your own research and on your

own system, does that come from some other source? Are you able

to access any other -- like are you able to access Canada Revenue

Agency records and determine perhaps what they’ve been selling

their animals for or making?

A

No, there’s no such other method. It’s -- there’s no

livestock market reports to read. Even published figures from

provincial bodies don’t tell you that they’re actually based on

sales. They’re -- they could well be based on a group of people’s

prices, which can be different than what the sale prices are.

Q

A

Q

A

So that doesn’t exist in Saskatchewan?

No, it doesn’t.

Does it exist in Alberta?

There is such a document, yes.

(Transcript of hearing, pp 369-370)

[191] He also described his expectations going into the WHGR evaluation:

Q

MS. BIRD: So going into the Willow Hollow

compensation process -- and you’re aware that they’ve purchased a

hundred animals in the past year. What does that tell you just as a

preliminary source of information? What are your thoughts related

Page: 125

to that information when you’re going into that first compensation

meeting?

A

My thoughts was that this is going to be relatively easy

because we will have quite accurate proof of what this animal cost

or this one and this one, and we can have a discussion about what

changes we might have seen in the past year. It’s been a year since

those animals were purchased or six months or whatever, and we

could fine-tune those figures based on -- on proof of which

direction the industry might be going in values and -- and that we

should be able to arrive at a very fair level of compensation.

Q

And had you had similar experiences to that prior to in your

other evaluations?

A

Yes, I have. I have had a number of situations where the

documentation provided showed what the animals had been

purchased for and what similar animals from the same herd had

been sold for, so it was fairly easy to arrive at -- at what appeared

to be very accurate figures.

(Transcript of hearing, pp 370-371)

[192] Dr. Bischop describes the material aspects of the March 5, 2014 meeting as follows:

From CFIA we -- we mostly were -- well, we had an

A

agenda that was gone through, and documents that were required

to be presented to them were -- were done so, and we -- it was

spoken about how the process should work, and we didn’t really

get a lot of other opportunity to present information. This was -- we

were looking to gather information so that evaluations could be

made.

Q

Did you -- sorry. Oh, I was going to just follow up on that

with had you gone into the meeting with a determination in terms

of the approach that CFIA was going to take in the valuation?

A

To the degree that -- that we were asking for proof of

values, receipts, invoices, that sort of thing.

Q

Was there any other flexibility as – as you went? Was there

any -- like aside from the proof, as you said, was it, you know, this

is -- was CFIA telling Willow Hollow this is the way it’s going to

be?

Page: 126

A

I don’t think it was really so much as telling as requesting

that kind of information. We didn’t get to do all that much talking.

Randy Wehrkamp did a lot of talking about the handwritten

document that he had, the five-or-six-page one that outlined why

he and I presume the owners of the ranch felt that their animals

should be valued at a certain amount.

Q

So was there any agreement at the meeting with respect to

values to be assigned?

A

I think that I agreed that I was pretty close on -- on what a

hunt-ready animal would be. We were -- maybe not an exact, but it

was within several hundred dollars per animal, that, you know, it

wasn’t that I was at half the value or twice the value that they were

talking.

Q

So after the March 5th meeting -- so -- well, before I get

there, but how -- how did it end, the meeting? How did it end?

A

You know, I don’t recall that much more than I agreed

more or less with what they were saying for a hunt-ready bull.

Q

A

And that was based on what information?

Previous history, price lists from other individuals. The

price of a hunt-ready bull is something that can be documented

because there are purchases that – and sales for -- for that class of

an animal, just as we could determine the meat price on a given

day or a given month.

Q

So coming out of that meeting – and you’ve received the

information from the -- the Willow Hollow folks, and you’ve gone

in with a positive view of how things could go. You’re provided

with a -- an initial -- as it appears, an initial valuation that was

provided and claims and assertions related to the animals

themselves. Are you leaving with the same positive feeling?

(Transcript of hearing, pp 372-374)

[193] Dr. Bischop produced his report on March 26, 2014:

Okay. Thanks. So prior to March 26^thwhat kind of

Q

information was provided by -- by Willow Hollow that you relied

on in making your report?

Page: 127

A

I don’t recall that there was a whole lot more information

provided. The requested invoices or receipts for the large number

of animals that were purchased in the recent past in the herd

history were not provided, and, you know, I spent a few pages here

talking about general values of hunt animals, but in the end, I

really couldn’t do a decent job on this report. I was disappointed

that – that there was a failure to produce the documents that would

have made the valuation accurate and fair.

(Transcript of hearing, p 375)

[194] Dr. Bischop spoke at some length about the problems he had in trying to complete a

meaningful report in this case:

Q

So did you -- so you had done a comparison between the

Willow Hollow and the Janzen herd, correct, for -- it looks like the

velvet weights?

A

Yes, and basically the -- the Janzen herd had better weights

of velvet, but something not to get too hung up on on velvet

weights is that although it can be an indication on the animal’s

value, it also can be an indication of how good the operator is too

because nutrition is very important in maximizing the genetic

potential of the antler growth, and so the same animal and the same

genetics on different farms might have different results, so take

them with a grain of salt is what I’m saying.

Q

And in terms of the Janzen or the Forjay Farm evaluation,

do you recall what was assigned to velvet?

A

No, I don’t.

Q

Okay, and did you assign any values to velvet in your

report?

A

No, I didn’t. I had so little information that I really couldn’t

complete my report. I mean I could have said, okay, slaughter

animals are this much, but in the end, we have a much more

accurate picture of what those slaughter animals are worth. We

have the actual weights from their slaughter, and we can multiply

that by a reasonable price, not the price that -- necessarily that

CFIA gets because it’s a tradition that when animals are ordered

slaughter, the slaughter plant lowers the price, so the actual

receipts that -- on these animals isn’t reflective of a normal

Page: 128

transaction through -- through a slaughter plant. The weights,

however, should be accurate.

Q

A

Q

And we actually see that, don’t we, with this, in particular?

Yes, we do.

Do you know how much velvet was actually the price that

was assigned?

A

Q

A

Q

A

Q

The velvet or the meat?

Oh, sorry, the meat.

The meat.

My apologies.

Yeah. I would have to look at Dr. Graham’s report.

No, in terms of the 2014 prices that were assigned from the

slaughterhouse.

A

Not off the top of my head, but I believe it was more like

$4 a kilogram rather than 7 or 7.50 or whatever.

Q

So the slaughterhouse does that, so in terms of -- if we go

to R-1 tab 43, so what we -- oh, sorry.

A

Q

Yeah, $4.50 a kilogram.

So that’s -- so in terms of what these animals would have

gotten for 2014, you can’t really rely on that, can you?

A

Q

A

Not on the price per kilogram, no.

So you have to rely on other –

Other sales in or around that time should be much more

indicative of a fair value. Slaughter plants do this because there

may be extra testing, there may be extra cleanup, and they do it

because they can.

Q

So in making your report what did you base your numbers

on? What -- what was the information that you were using to apply

to this report?

A

Based on purchase receipts from people like Darcy

Lepowick and looking at the documentation that was supplied to us

Page: 129

in generalities on what was said to be similar animals, a little

difficult because purchases that were made of hunt-ready animals

in this situation, because of the rebuilding, a lot of those animals

were shot off, which is why they were purchased, so the other

animals weren’t necessarily purchased at the same price, and

there’s not necessarily a link in their quality because they were

purchased for different reasons.

Q

So you said that you were relying on the receipts or

information that was provided by Willow Hollow. Were you still

applying the same kind of approach, I suppose, as you had gone

into the compensation meeting with?

A

No.

I was unable to really do the evaluation properly

because it should be based on what actual sales and purchases are

of the animals involved.

Q

Now, you -- if we review Mr. Wehrkamp’s report, his

March 10th valuation, and your report and the valuation that you

ended up assigning to the animals, would you agree that they are

fairly close?

A

Yes, they were.

Q

So I guess I’m seeking some clarity for myself and for the

Court too, but you’ve said that you couldn’t value properly, but

you -- you came fairly close to Willow Hollow’s assertions, so

were you still going along on the premise that you were accepting

their prices as well?

A

I don’t think that the issue was so much the exact price of

the animals. If we were relatively close on them, the key question

is how many of these animals should be valued or what portion of

them or, you know, put it in that way, and how many should be

valued according to criteria such as velvet and weight. I guess that

I like to look at things in extremes and then see if that clarifies

things, so if this was strictly a -- a velvet and meat property, 600

animals, well, then it would seem reasonable to look at velvet

prices and look at meat price and go from there, but then what if

this ranch or this farm had one -- had one hunt a year? Do they all

become hunt animals, then, and you up the value by $2,000 apiece

or do you say, well, you hunt one a year, so one of them should be

valued as a hunt animal? And I think that’s more the approach that

Dr. Graham took when he did his final report, and to me it makes

sense, and in the lack of other documentation, I think it is as fair as

what he could have made it.

Page: 130

Q

So I --

JUSTICE:

Excuse me.

MS. BIRD:

Yeah.

JUSTICE:

correct?

You’re commenting here upon Dr. Graham’s report,

A

Correct.

JUSTICE:

Does that mean that you are now revising your own

findings in light of what you’ve learnt about Dr. Graham and his

report?

A

In my report I really didn’t complete my report.

JUSTICE: But you did come up with some values.

I came up with some values that were not that far off Dr.

A

Graham’s, but the question is how many animals do we apply that

value to, and I was unable to come up with enough information to

make that judgement.

JUSTICE:

I did, but I did not say times 265 or anything like that.

JUSTICE: Okay. Okay. Thank you.

MS. BIRD: So had you had the full wealth of information

But you did recommend a figure for compensation.

A

Q

that had been provided to Dr. Graham with the understanding that

no further information would be provided would your values or

would your report have changed much?

A

I guess if I really believed at the time that that was it, then,

yes, I would have had to have done something like Dr. Graham did

and made a judgement as to how many animals then should we

value as hunt animals and how many then would be at a lesser

amount.

Q

A

Q

A

And did you state your concerns in your report?

Yes, I do.

And what were they?

That there was just a lack of information about purchase

prices. There was a presumption that the bulk of the purchased

Page: 131

animals were similar in value to the animals that were purchased

primarily for hunting right away and little to back up that assertion

that they were of equal value.

Q

So had Willow Hollow provided some substantiating

documentation in some form in relation to the claims that they

were making would it then -- to the other side, would you have

maintained the value -- the values that you had reached in your

report?

A

With further information I certainly may have modified it.

It’s become apparent now that animals were purchased soon after

that were said to be of a similar quality to the hunt animals that

they had, and --

Q

A

Q

A

Are you speaking about the Klettberg Farm --

Yes.

-- purchase?

So that figure would have had some relevance for a portion

of the herd.

Q

And that information was provided to CFIA after you

issued your report.

A

Q

A

That’s my understanding, yes.

And were you asked to update your report?

No, I wasn’t.

(Transcript of hearing, pp 376-382)

[195] Dr. Bischop confirms that Dr. Graham may have been inaccurate in his Valuation Report

in assuming that Dr. Bischop had assigned a $4,800 value to the hunt herd premised on the fact

that the entire herd was made up of trophy bulls:

JUSTICE:

I wonder if I could put this question to you, Dr.

Bischop. In his own report of May 2nd, 2014, Dr. Graham

comments upon your report. You may or may not be aware of this,

and if you’re not aware of it, I’ll turn it up for you. He says in his

points for review that: (as read)

Page: 132

Dr. Bischop’s assigned value of $4,800 to the hunt

herd is premised on the fact that the entire herd is

made up of trophy bulls.

Is that accurate?

Yes.

A

JUSTICE:

You -- that was your premise, the entire herd was

made up of trophy bulls?

A

I had no proof either way.

JUSTICE:

But was that your premise, then? If you had no

proof either way, why would you assume they were all made up of

trophy bulls?

A

Then I guess it was not my premise because, as I said

earlier, I did not say times 265 or whatever the number was.

JUSTICE:

So you’re saying that Dr. Graham is being

inaccurate when he says that?

A

That may well be, yes.

(Transcript of hearing, pp 382-383)

[196] Dr. Bischop is of the view that the chairperson does not have to accept valuation reports

provided by the experts involved in the evaluation:

Q

-- for -- for a depopulation.What is, then -- I suppose the

obvious question is, then, is it necessarily going to be that every

evaluation report is going to be accepted by the chair or is there -- I

suppose to clarify, is there -- is there a chance that there’s going to

be some disagreement even?

A

Yes, there certainly can be. The chair has the final say and

has to consider all of the evidence that’s there or isn’t there and

make a decision based on both what’s been presented but, as well,

noting the deficiencies in what’s presented. Dr. Graham did

receive e-mails through the course of this that showed that perhaps

a fair number of these animals were purchased at about meat price,

so he would use that information in making this decision.

(Transcript of hearing, pp 384-385)

Page: 133

[197] In cross-examination, Dr. Bischop confirmed that an elk six years and older would be

considered a mature bull:

A

Q

I believe it’s six and older.

So it’s -- not only is it a farm opinion that that’s a

reasonable age, it’s your opinion and certainly the opinion of

industry that that’s a reasonable point to expect bulls of that age

are hunt-ready.

A

Correct.

(Transcript of hearing, p 389)

[198] As regards the recent rise in elk values, Dr. Bischop confirmed as follows:

Q

Okay. Thanks. You commented earlier just on what’s

happening with the prices since 2009. Was any of that information

shared with you that may have been submitted by the industry

expert to Dr. Graham?

A

Q

I believe that was, yes.

Okay, and those prices are all on – or what’s happening to

the prices?

A

Q

There’s been a steady increase.

Okay. Okay. Earlier -- I think I’m allowed to say earlier

testimony has basically shown prices increasing 122-plus percent

during the period of time for -- for elk, as an example.

JUSTICE:

Do you agree with that?

A

Well, it depends on what period of time we’re talking

about.

Q

MR. WEHRKAMP: The testimony was based on a five-

year period.

A

Q

A

I recall that testimony.

Pardon me?

I recall the testimony, and it seems reasonable, yes.

Page: 134

(Transcript of hearing, pp 389-390)

[199] Dr. Bischop also confirmed the major valuation problem referred to in his report:

And the farm operators gave you a perspective on what’s

Q

happening in the total dollar of hunt sales and what type of bulls

they’ve been hunting, correct?

A

They did, but as I put in my notes, the remaining animals

on the property were not necessarily of the same quality as what

had been hunted off for the past number of years. There was no

proof provided to that.

(Transcript of hearing, p 390)

[200] When it was pointed out to him that the valuation in his report was within 10 percent of

the WHGR valuation, Dr. Bischop explained as follows:

Q

But you didn’t -- you did not see the industry expert’s

second report on valuation.

A

Q

A

Q

I don’t believe so.

Okay.

I am not sure at this point.

So the farm completed their own valuation. You, acting

independently without access to the report that the farm completed,

completed your valuation, and it was within 10 percent. Agreed?

A

Not entirely. I was not able to determine how many of the

animals should be valued as hunt-ready animals.

Q

Well, I’m just going by your March 26^threport, which

highlights the values of animals that would be representative or, in

fact, specific to the farm. So the fact that this report is submitted

and there’s -- I understand that you did not have all of the

information, but you had information. You completed a report

based on valuation.

You submitted it to Dr. Graham. It’s then

Dr. Graham’s -- I’m just trying to describe process here. Then it’s

Dr. Graham’s responsibility to -- to review your report and

consider it as the report from the industry expert. Yes? No?

Page: 135

A

Yes, and I do recall Dr. Graham clarifying that this -- these

values would be for the portion of the herd that would be the hunt-

ready portion.

Q

And earlier you’ve made reference to the fact that Willow

Hollow is a hunt farm, hunt operation. Agreed?

A

Q

I said that’s what they call themselves.

Mmhmm. So as I understand it, you were given on March

5th the information that was available. Pertinent information was

shared with Dr. Graham. Some, but you’re not sure how much,

was shared with you. You completed the report to the best of your

ability, correct, based on the information you had?

A

Q

A

Q

I highlighted the lack of information that was --

Agreed, but it was --

-- that was there.

To the best of your ability, you completed that report based

on the information you had.

A

Q

A

I did not actually complete the report because I could not.

But was it not --

I was operating within a vacuum of information, and I’m

presuming that you read the Common Procedures Manual on

evaluating and noted that receipts and invoices are --

(Transcript of hearing, pp 392-394)

XI.

ANALYSIS

[201] The Appellant made it clear at the March 5, 2014 meeting that “genetic value” was

central to the valuation process. Mr. Wehrkamp’s hand-written submissions had the following to

say on point:

To assist in determining the value of bulls the genetic value must

be first considered. This point is validated by previous sales and

demonstrated production results validated by antler competition. It

Page: 136

is critical that the herd be replaced with equivalent genetics and

potential. This is a key point stated 4.4 Market Value (Common

Procedures Manual).

[202] Genetic value was difficult to establish in this case because these were not antler scores

and most hunt sales reflected the values of “hunt-ready” bulls that had been purchased for the

hunt, and so were not necessarily indicative of the genetic value of those animals that remained

in the herd. In addition, the Appellant refused to produce any receipts or invoices for the

purchase of any of the remaining animals in the herd except for SNOR 901W, a bull which was

awarded the maximum compensation of $8,000. There were no live animal sales except for

hunts.

[203] At the March 5, 2014 meeting and following, the Appellant attempted to fill the

information gap left by the failure to produce receipts in various ways.

[204] As Mr. Wehrkamp’s written submissions of March 5, 2014 show, he divided the herd

into “highly productive,” “medium productive,” “average productive.” Because the purchases

since 2009 had been made from various farms, he assigned each farm a productivity value

“based on the productivity of the farm’s genetics and marketability of each farms elk.” He then

went on to rank bulls in the Appellant’s herd in accordance with their farm of origin, and used

age as a further indicator of value.

[205] From CFIA’s perspective, Dr. Graham feels that he provided a reasonable evaluation

given the shortage of information he had to work with. Ms. Bird, counsel for CFIA, summarized

the CFIA perspective at the hearing before me in Battleford when she said:

Page: 137

MS. BIRD:

…Given the dearth of information that was

provided that was directly related to the animals that were

depopulated, the ability for CFIA to value the animals was, we

submit, made unnecessarily more difficult. I understand from this -

- from Dr. Graham’s evidence today that he understood the

seriousness of these types of compensation processes. He

understood that this is people’s livelihoods. He understood that,

you know, depending really on the farm, they -- some of them, you

know, take a more passionate approach and others, you know, in

terms of their depopulations, you know, they -- some of them are

involved, some of them aren’t, you know, but he did approach this

compensation with a level of -- I think he expressed -- he perhaps

didn’t say the word, but I’ll say it -- of compassion, and he did not

go forward with a – you know, an all or nothing approach. What he

arrived at and based on the information he reviewed, based on the

information that, as it came in, he was willing to adjust his values I

think shows that Dr. Graham was really doing his best.

…

MS. BIRD:

Yeah, absolutely. So the CFIA approached the

valuation of the Appellant’s elk in consideration of a number of

factors that included but was not limited to the information that

was provided by the Appellants, replacement values, the claims of

the Appellant in relation to their genetics and the age and use of

the animal and the information, as I said, that included comparable

prices from other farms and, of course, through CFIA’s own

independent efforts. It wasn’t an easy task. CFIA did their best to

assign fair market values that would ultimately result in the

Minister’s award of compensation, and, as such, we submit that the

award of compensation was reasonable. Unless you have any

further questions --

(Transcript of hearing, pp 430-432)

[206] Both sides agree that valuing these elk was not an easy task. What is of concern,

however, is the $500,000.00 discrepancy in their respective valuations. Reasonable people can

disagree, but this discrepancy suggests that one side got it seriously wrong.

Page: 138

[207] When I asked Dr. Graham what he saw as the material differences between the

Appellant’s evaluations and his own, he answered as follows:

JUSTICE:

-- about meat prices. Okay. So just in terms of

summary for my benefit here, what do you see as the material

differences between the Appellant’s valuation and your valuation?

What does it come down to?

A

The difference is the percentage of animals that are being

deemed as, you know, actually hunt bulls that are actually being

hunted out and the ones that I deemed basically aren’t hunt quality,

and basically they basically assigned hunt-quality values to every

animal that was on the place other than the two and three-year-

olds.

JUSTICE:

Right, and that’s the difference with Mr. -- Dr.

Bischop’s report too.

A

Right.

(Transcript of hearing, p 352)

[208] The values at issue relate to animals purchased by WHGR following the 2009

depopulation, and were part of their efforts to rebuild their elk herd. Dr. Graham revealed in his

testimony that he was well aware of this plan:

Q

And what type of business did you understand that they

were running?

A

It was basically a breeding -- a breeding farm, and they did

tell me that, you know, they had been depopulated in 2009 and

they wanted to get back into the elk business ‘cause they had put a

lot of infrastructure into the business. They were focusing on, you

know, the hunts. They spent some money, and they wanted -- you

know, that’s where their interests were and that’s where their

living was, and they wanted to get back in, so since 2009 they had

been buying females and males, bringing them in, and it made

sense. They were basically culling the low end. When I say the low

-- yeah, the low end, and the ones that weren’t either going to

make it as a velvet bull -- I’m talking about the males now --

they’d send them to slaughter. The ones that had some value that

they could, you know, basically keep them for a year or two or

Page: 139

four. As long as it was making economic sense, they’d keep them,

get some velvet sales from them, and if they developed into a hunt

where the animal they can sell as a hunt, they’d end up on a hunt

farm. The females did the same, bought females from about 10

producers. That’s what I was given to believe, culled them as well.

They kept the better ones. The low end went to the market, and

they were trying to breed up so they wouldn’t have to buy these

hunt bulls. It made more economic sense. It made more money if

you could produce them. At least you can control what you had

each year as opposed to competing with various other hunt ranches

in the province for the same amount of stock, so, yeah, the

business plan made sense to me.

(Transcript of hearing, pp 236-237)

[209] The evidence is clear that a significant aspect of this rebuilding process involved “block

purchases” of elk from other farms. I understand this to mean from Mr. Wehrkamp’s evidence

that a block price was paid for a group of animals that could be expected to be of varying quality

as individuals. Hence, no individual animal in the group could be ascribed a value based upon

the block-purchase price at the time of acquisition. These block-purchased groups were then

subjected to fairly aggressive annual culling so that poor producers were eliminated from the

herd and, over time, the overall value of the herd and the remaining individual animals would

improve.

[210] It is immediately apparent that this annual, cyclical culling process from block-purchased

animals presents a significant evaluation problem when another depopulation occurs (as it did

here in 2014) and the whole elk herd is destroyed. It is a problem because, without a physical

inspection of the animals concerned (which did not occur here), there is no receipt or invoice

available for individual animals (or even groups of animals of like quality) that can be used as an

indicator of quality and value for each animal at the time of purchase.

Page: 140

[211] In their evidence, neither Dr. Graham or Dr. Bischop gave any indication that they had

ever had to deal with this particular valuation problem before. Nor did they indicate that they had

consulted with anyone who had dealt with it, or had gone to any authoritative source that could

be used to address elk values when block-purchased animals are destroyed some years after they

were purchased. Nor is there any evidence to suggest that rebuilding an elk herd in the way

WHGR did is unusual or outside of industry norms. As Dr. Graham testified, “the business plan

made sense to me.” So there is no evidence to suggest that CFIA, in this case, was confronting an

unusual business situation or one that does not fit within industry norms. Yet, their evidence

reveals that Dr. Graham and Dr. Bischop had a difficult time in providing an evaluation in these

circumstances and that what Dr. Graham finally produced in his report, and what was finally

endorsed by the Minister, was nowhere near the industry perspective and, from the point of view

of WHGR, resulted in a $500,000.00 shortfall in compensation.

[212] Much has been said in this dispute about the importance of receipts, and throughout the

valuation process, Dr. Graham repeatedly asked for receipts for the animals acquired by way of

block-purchase. As he says in his report, he wanted the purchase receipts “to substantiate that the

existing herd is as valuable as the trophy animals already hunted off.” So Dr. Graham’s position

was that purchase receipts could be used to establish the value of the elk in the herd that had not

been hunted off. However, there is no explanation in Dr. Graham’s report as to how a purchase

receipt for a block of animals that does not ascribe a value to any particular animal (or group

within the block) could then be used as an indicator of value for animals that are destroyed years

later. Nor does Dr. Graham explain this issue in his oral evidence. He remains convinced that

only receipts would have given him the evidence he needed, but he does not explain how this

Page: 141

could help if purchases are made in blocks of animals of different ages and quality for which no

individual purchase price can be identified.

[213] The evidence from WHGR is that the block-purchases contained animals of different

ages and quality, and that the poor producers were, under the farm’s culling program, eliminated

and sold for meat. This way of increasing the value of the remaining herd “made good sense” to

Dr. Graham, as he told us at the hearing in Battleford. On the other hand, Dr. Graham also gave

the following evidence at the hearing:

Q

MR. WEHRKAMP: Thank you, Justice Russell. I guess

continuing on from before lunch, Dr. Graham, I’d like to spend a

little bit of time talking about sort of farm management practices

and culling of animals. You’re aware -- are you aware that Willow

Hollow culls animals annually?

A

I am.

Q

I think we agreed this morning that they purchase blocks of

bulls, bring them home, cull the meat animals and keep the animals

that are left as either velvet or hunt.

A

Q

Mmhmm. Correct.

Good. Is that a practice that you’re familiar with that you

would agree to, that culling is a normal practice of the livestock

industry, particularly in this case the elk?

A

Q

Correct.

Do you -- if you buy -- and I’ll give you the example and

ask you to -- to comment because we discussed this yesterday. If

you buy a block of animals for a volume price, a single price, not

individualized, take out the bottom 27 percent because that’s what

was culled from the Willow Hollow herd in the year prior to, in

2013, 27 percent, so if you take out 27 percent --

A

Mmhmm.

Q

-- of the animals, does that have an impact on the value of

the remaining animals?

Page: 142

A

Q

A

Q

A

Q

A

Q

Correct.

It would.

So the values would do what, go which way?

The ones that are left.

Would they increase or decrease?

In theory they should increase.

Okay. Thank you. Are you -- I’d like to draw the -- your

attention to this booklet, the small one. If you have it, section 118,

which is -- while you’re looking for it -- a three-page documented -

- document which was directed to yourself, an e-mail from myself.

A

Mmhmm.

Q

And on the bottom there’s a handwritten note that says, No

receipts considered, meat/velvet. I think it says, Annualized cost of

maintenance and a question mark, and below that it says, Fail to

see where culling increases values of remaining animals. Is that

your handwriting?

A

Q

A

Q

It is. So you see -- okay.

But you just stated to us --

Correct.

-- that it would have a positive impact, and here the

statement is you fail to see where culling would have any positive

impact.

A

Q

A

I’ll explain that.

Please do.

You’re culling off a certain percentage of animals each

year. You bring animals in. Some go to meat. Some remain in the -

- the herd as velvet. Some go to hunt, but once they’re there, you

bring some more in, so overall the average says the same, Randy,

‘cause you keep moving in, coming back out, moving in, coming

back out ‘cause each year you’re taking off so many, but to keep

supplying the hunt herd, you may have to bring more back in, so

overall the average doesn’t change.

Page: 143

Q

I would suggest you need to check your math. If you have

100 bulls -- and let me give it as an example. If you have 100 bulls.

A

Q

A

Q

A

Q

A

Q

A

Q

Correct.

25 go out.

Correct.

That’s 25 percent of your herd.

Correct.

You have 75 left. If you bring in another hundred --

Correct.

-- and cull out the 25 percent of that herd --

Correct.

-- that -- that changes the percentage. It doesn’t remain at

25 percent on cull basis. Then you’re culling a lesser number. It

does -- it –

A

If you’re at a continuous operation and you want to keep

the hundred -- in this case with the Willow Hollow, in the

compensation they were bringing in three-year-olds and two-year-

olds. These are the ones – the first bunch that have come off their

farm from the breeding program. They’re coming in. You’re not

sure what you got. So you -- you -- the previous year you’ve done

some culling. You bring in the ones following in behind which

were part of the depopulation. You don’t know what value they are

‘cause they’ve only come in as two and three-year-olds, so the

overall average doesn’t change.

Q

I suggest your math is still wrong. I don’t understand how

that can be correct.

A

No, it’s not wrong. I thought about it last night actually.

Q

Fair enough. That’ll be a point that we agree to differ on,

then.

A

Q

Okay.

If you -- we’ve already given the example. I don’t have to

give it any more, but of the animals that remain after the initial

Page: 144

culled -- culled animals, right, that 75, following along with the

example for simplicity sake if we could --

A

Q

Correct.

-- that single group would be worth more money than you

stated. The value would increase of those 75 animals.

A

75 animals are left. Each individual animal would have --

would be considered a better animal ‘cause you got rid of the

poorer ones.

Q

Exactly. Thank you. Now, when we talk about hunt bulls --

(Transcript of hearing, pp 337-341)

[214] So we have evidence here that, prior to the final evaluation, Dr. Graham didn’t think that

culling increased the value of the remaining animals. Yet his evidence is that “culling the low

end…made sense to me.” If Dr. Graham truly believes that the “overall the average doesn’t

change” then it is difficult to understand why culling made good business sense. I also think that

Dr. Graham’s confession that “I thought about it last night actually” is an indication that at this

point in his testimony he is engaged in an ex post facto defence of his valuation and is not telling

us what he thought or did at the material time. All in all, the evidence seems to suggest that, at

the material time, Dr. Graham did not ascribe any kind of appreciable or realistic value achieved

through the culling process, notwithstanding that he now says it made good business sense.

[215] In his own report, Dr. Bischop tells us that he has had considerable experience in

valuating elk. Yet there is no evidence to suggest that he had ever confronted, dealt with, or

sought advice on the valuation issues that arose in this case because of the block-purchases and

culling that had been used to rebuild the herd after the 2009 depopulation. And there is certainly

Page: 145

no indication in his report that he had ever confronted this issue, or that he knew how to go about

dealing with such an evaluation.

[216] Dr. Bischop indicated that both he and Dr. Graham had been involved in the Forjay

Farms evaluation that had occurred a few months earlier, and Dr. Bischop indicated that, as far

as he knows, no problems have arisen from that compensation. Yet neither Dr. Bischop nor

Dr. Graham say that there were any problems related to block-purchases that had to be resolved

and/or how they were resolved in that case or any other case. Both Dr. Graham and Dr. Bischop

say that they looked at the Forjay Farm situation when dealing with WHGR. Yet Dr. Graham

says “an elk is an elk is an elk.” So it is difficult to see what relevance Forjay Farms could have

had for WHGR if Dr. Graham’s approach was adopted. In fact, it is clear from Dr. Bischop’s

evidence that he went into the WHGR evaluation expecting that the usual situation would prevail

and that the evaluation could be based on receipts:

A

My thoughts was that this is going to be relatively easy

because we will have quite accurate proof of what this animal cost

or this one and this one, and we can have a discussion about what

changes we might have seen in the past year. It’s been a year since

those animals were purchased or six months or whatever, and we

could fine-tune those figures based on -- on proof of which

direction the industry might be going in values and -- and that we

should be able to arrive at a very fair level of compensation.

Q

And had you had similar experiences to that prior to in your

other evaluations?

A

Yes, I have. I have had a number of situations where the

documentation provided showed what the animals had been

purchased for and what similar animals from the same herd had

been sold for, so it was fairly easy to arrive at -- at what appeared

to be very accurate figures.

(Transcript of hearing, pp 370-371)

Page: 146

[217] This suggests to me that both Dr. Graham and Dr. Bischop had no experience in valuing

elk in a situation where animals are acquired under block-purchase arrangements, where they are

of a mixed age and value and are culled over time before they are depopulated. This is the central

valuation issue in this dispute. And yet neither CFIA witness spoke to any kind of similar

experience or suggested a methodology for dealing with it. They insisted that they needed

purchase receipts but they didn’t explain why a block-purchase receipt would have given them

an indication of value for the depopulated animals. Nor, it seems, did either of them consult

anyone, or source any information that went to this central valuation issue. They both continue to

insist that receipts were needed, but neither of them say what a block-purchase receipt would

have told them about the purchase value of individual animals. Nor do they explain how WHGR

could have provided a sale comparator in a situation where they were rebuilding a herd from a

previous depopulation and were culling and retaining animals to increase the value of the herd.

[218] Both Dr. Graham and Dr. Bischop were focussed on receipts and/or invoices that would

demonstrate animal quality and value at the time of acquisition and/or at the time of sale. As a

result of not receiving this information, Dr. Bischop says that he could not complete his report:

A

No. I was unable to really do the evaluation properly

because it should be based on what actual sales and purchases are

of the animals involved.

(Transcript of hearing, p 379)

[219] When I questioned Dr. Bischop on his present position, his response was as follows:

Q

So I guess I’m seeking some clarity for myself and for the

Court too, but you’ve said that you couldn’t value properly, but

you -- you came fairly close to Willow Hollow’s assertions, so

were you still going along on the premise that you were accepting

their prices as well?

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