Livestock Destruction – Whose Risk?

The Federal Health of Animals Act authorizes the Federal Minister of Agriculture to order the destruction of animals contaminated or suspected of being contaminated and related regulations authorize the Minister to impose caps on compensation paid to the livestock owners. Where the contamination results from the alleged negligence of Agriculture Canada officials, can livestock owners recover from the federal government the full market value of their animals and other financial losses?

The Federal Court of Appeal recently considered an appeal of a lower court decision restricting available compensation in such circumstances to the limited amount determined by the Minister. In this case, the Minister had ordered the destruction of an elk herd consisting of 258 animals following the discovery of tuberculosis in one of the animals. Acting under authority of the federal regulations, the Minister awarded compensation to the owners of the elk herd in an amount substantially less than the appraised market value of the animals. The elk owners sued the federal government for additional compensation equivalent to the fair market value of the animals destroyed alleging that Agriculture Canada officials were negligent in allowing tuberculosis to enter Canada.

The claim was summarily dismissed by the lower court on the basis of a provision in the Crown Liability Act which prohibits a claim being brought against the federal government “if a pension or compensation has been paid or is payable out of (federal funds) in respect of the death, injury, damage or loss in respect of which the claim is made.” In coming to this conclusion, the lower court stated:

    “… the Minister chose to transfer the health risk of elk ranching to the ranchers, instead of absorbing it entirely through use of public funds. I find that by the Act and Regulations the Minister was entitled so to do. I respect the Plaintiffs’ attempt to have the Minister account for the authority used, but find that the action taken, while unpalatable to them, was legal.”

In affirming this lower court decision and dismissing the appeal, the appellate court rejected the plaintiffs’ contention that the prohibition in the Crown Liability Act did not apply to a claim for losses in excess of the compensation awarded where the loss was caused by the failure of federal officials to take all reasonable steps to prevent the entry of tuberculosis into Canada and to eradicate the disease when first discovered. The appellate court stated:

    “The question to be asked … is whether the factual basis of the compensation received by the appellants and that of the action which they have commenced against the (federal government) is the same. If the answer to that question is a yes, then the action cannot continue.

    The factual basis of the compensation received by the appellants is the destruction of their animals and the loss which results therefrom. As to the factual basis of the appellants’ action, it appears to me to be undistinguishable from that of the compensation which they received …

    I cannot see how it can be argued that the factual basis of the compensation and the action differ. In my view, they are one and the same. Whether the destruction of the appellants’ animals results from the negligence of officials in failing to prevent the entry of tuberculosis into Canada or by reason of any other ground of negligence, is, in my respectful view, irrelevant. The plain fact is that both the compensation received and recovery sought by way of the appellants’ action result from the same occurrence, i.e. the destruction of their herd.”

Livestock owners seeking compensation for the destruction of their animals by federal authorities should be aware that available compensation may be substantially less than the market value of their animals. These farmers bear the risk of financial losses which may result from the destruction of their animals in excess of available compensation regardless of whether the losses have been caused or contributed to by the conduct of federal officials.

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