CWB class-action suit a step closer to litigation

Manitoba Court of Appeal overrules lower court, allows case to seek certification

A proposed class-action lawsuit against the federal government and G3, alleging millions of dollars of farmers’ money was improperly used to privatize the Canadian Wheat Board (CWB) in 2012, is a step closer to certification and litigation, says Stewart Wells, chair of the Friends of the Canadian Wheat Board, which is backing the suit.

The Manitoba Court of Appeal has overturned a lower court judge’s ruling to strike the suit.

The higher court on Wednesday “ruled that our cause of action — ‘malfeasance while in public office’ — is legitimate, and that our litigation against the federal government can continue,” Wells said Friday via email.

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“The alleged offence occurred when Gerry Ritz was the minister of agriculture and the Canadian Wheat Board was being destroyed by the Harper government in 2011.”

The decision, Wells said, means “we can continue our legal process which calls for the repatriation of $150 million to farmers who were marketing wheat and barley through the CWB in 2010-11 and 2011-12. The legal action also calls for $10 million in punitive damages. With interest accruing since 2012 the total number would be in the $190 million range.”

In a phone interview, Wells said the Court of Appeal’s written ruling underscores the suit’s credibility.

“There is nothing on the record before this court to suggest that the allegations (in the suit) are bald conclusions, patently ridiculous or manifestly incapable of proof,” the Court of Appeal’s written ruling states in part.

It goes on to say the lower court judge’s decision to strike the suit “is so clearly wrong as to amount to an injustice.”

Wells said it’s unclear when the suit will go before a judge to be certified. If it is, farmers who did business with the CWB during those two crop years will be part of the action, unless they opt out.

Of the $151 million the suit claims should’ve gone to farmers who delivered to the CWB, it alleges $145.2 million ended up in the CWB’s contingency fund and $5.9 million was withdrawn from the CWB’s pool accounts. The allegations have not been tested in court.

The CWB set up a contingency fund to cover losses that occurred when farmers opted to price grain sales outside the CWB’s pools. It was funded when transactions earned more than the prices farmers at which farmers sold. The fund was meant to break even over time.

“In order to fund the transformation of the board to a privately held entity, the defendants engaged in a course of conduct intended to reduce payments to farmers who had sold and delivered grain to the board during the class period and to increase the monies in the contingency fund,” the claim alleges.

The federal CWB Act didn’t allow the wheat board to use money earned from its pool accounts for anything other than covering its operating expenses. Gerry Ritz, who was agriculture minister at the time, said the government would cover the costs of transitioning the CWB to an entity that could be acquired by a private company.

“Nevertheless, the board improperly charged $5.9 million in transition costs to the pool accounts, which reduced the amount that was available to producers upon payment of their contracts during the 2011-12 crop year,” the claim alleges.

“The plaintiff pleads that the board breached its duty of good faith to the class (farmers who delivered to the CWB) by ignoring its obligations to the producers, and by allocating money to the contingency fund that otherwise would have been paid to the pool account contract holders.”

The Conservative government ended the CWB’s single-desk marketing authority effective Aug. 1, 2012.

Allan Dawson is a reporter with the Manitoba Co-operator at Miami, Man.

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