Farmers take Agricorp's overpayment policy to court

Wednesday, February 20, 2013

by SUSAN MANN

Sixty-two Ontario farmers have launched a court challenge of Agricorp’s move to recover government program overpayments, some dating back 10 years or more.

Ottawa-area agricultural lawyer Don Good says he’s representing the 62 farmers who’ve retained him and has filed an application in the Ontario Superior Court of Justice in Ottawa on Feb. 14 “to ask the court for an interpretation of sections three and 16 of the Limitations Act to determine whether Agricorp has an unlimited time limit or a two-year time limit.”

Good says there are more than his 62 clients who are interested in the challenge. The court case has been scheduled to be heard later this spring.

Agricorp spokesperson Stephanie Charest says they did receive a copy of the application notice Good filed in the Ontario Superior Court of Justice. But “we can’t speculate on any matters that are before the courts,” she explains.

Good says the Limitations Act states the Crown has an unlimited time to recover funds from people due to government program overpayments. But “the issue is: are Crown corporations (such as Agricorp) equivalent to the Crown?  If you look at the Crown Corporations Act, it says they’re agents of the Crown.” But if they’re agents “then you’ve got an agency, which means there’s an agent and a principle and an agent and a principle are not necessarily the same thing.”

Only the Crown has an unlimited time to recover any government program overpayments under the Limitations Act, Good says.

Last year Agricorp said there were 4,500 farmers who had overpayment accounts totaling $30 million and the agency contacted the farmers to retrieve the money. About 75 per cent of the accounts with overpayments are less than $5,000 each. But some are larger and Good says in his group of farmers launching the court challenge more than one producer has an overpayment of $500,000.

Agricorp said last year when it announced changes to how the overpayment accounts were being handled, the overpayments occurred because of incomplete program applications, processing errors, changes to farm operations and the nature of programs that provide advance payments for producers in financial distress.

Charest says to date about $14.8 million has been collected or pledged from about 3,000 farmers.

Good says he told his farmers “it’s nice to know that when the government is bankrupt that farmers are so willing to offer money that they may not owe.”

Even if he wins the court challenge, Good says that may not help the farmers who have already paid back the money Agricorp says they owed. “If they (the farmers) voluntarily pay it, then other issues come into play. If in fact you acknowledge the debt, the Limitation Act may not matter all that much because you’ve acknowledged the debt existed.”

Charest says in 2012 they contacted about 93 per cent of the farmers who had overpayment accounts  (4,167 farmers) and their debt totals $25 million. “That’s who we’re working with. The remaining accounts are being handled differently because the circumstances are particular. They are being looked at on a case-by-case basis” to determine the next steps for each individual case, she says.

Charest notes the farmers in the special circumstances group are a very small minority. So far, more than 70 per cent of the farmers Agricorp has contacted have replied and either repaid their balances in full or in part or committed to a repayment plan.

There are about 1,000 farmers who haven’t repaid their money or made arrangements to do so. Charest says Agricorp will continue working with those farmers with outstanding balances to “help them determine the most appropriate terms for repaying their debt within three years.”

Last year, Agricorp announced two changes in how it was handling government program overpayments. One was that all the money had to be paid back in three years and the other was that interest charges kicked in as of Jan. 1. Previously, the government waived the interest owing on overpayments.

The Ontario finance ministry sets the interest rate quarterly and the current rate is three per cent.

In the past, farmers could repay their overpayment from future program payments and they can still do that as long is the entire balance is eliminated within three years. They can also pay the overpayment in installments. Farmers who repaid their entire amount before Jan. 1 weren’t changed any interest. BF