The tribunal said the penalties assessed by Dairy Farmers of Ontario (DFO) were too harsh. Denby’s assessment of 10 kilograms of quota was reduced by the tribunal to 6 kilograms. Darmar Farms Inc. was assessed 2.5 kilograms.

The tribunal further cancelled all production credits, as well as the cancellation of the milk licences of the Denbys, Wayne Hope and Dale McFeeters.

They can produce milk for four more months.

Denby’s lawyer, Don Good, argued that the hearing before the DFO was prejudicial because DFO had a vested interest in shutting down Dairy Direct.

The tribunal said that allowing schemes without respect to authority would put the supply management system in jeopardy. The penalties, the tribunal said, must be strong enough to deter others.

In an interview, Denby said he didn’t expect to win this round because the odds were stacked against him. He says he’ll appeal to the minister and then go to divisional court.

In Ontario Superior Court in Toronto, Georgian Bay Milk argued that the then minister Helen Johns was in conflict of interest when she turned down the company’s appeal.

However, DFO, the Ministry of Agriculture and Georgian Bay Milk agreed to stay the trial until the appeal is heard.