A proposed class action lawsuit against the federal government and G3, alleging farmers’ money helped privatize the Canadian Wheat Board (CWB), is another step closer, says Anders Bruun, one of the lawyers working on the suit.
In a written ruling released Monday, Master Shayne Berthaudin of the Manitoba Court of Queen’s Bench ruled against the government’s attempt to walk away from a putative class action, which claims more than $145 million in damages owed to farmers who delivered wheat and barley to the CWB in the 2010-11 and 2011-12 crop years, along with $10 million in punitive damages.
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“This ruling puts the government’s shirt in the wringer,” Stewart Wells, a farmer at Swift Current, Sask. and chair of the Friends of the Canadian Wheat Board (FCWB), said in an interview Thursday.
“In the proposed class action farmers contend the former minister of agriculture, Gerry Ritz, deprived farmers of monies they should have received from the 2010 and 2011 crop years. Instead of paying farmers, we believe this money was used to sweeten the pot for whoever was going to acquire the wheat board.”
G3 Global Grain Group, a joint venture of U.S. agribusiness Bunge and Saudi Agricultural and Livestock Investment Co. (SALIC), acquired the CWB and its assets in 2015.
The federal government’s failure to stop the lawsuit clears the way for it being certified, Bruun, a Winnipeg lawyer, said in an interview.
“We have the paperwork filed seeking certification of the class action already,” said Bruun, adding he is confident it will be approved by the court.
Bruun represents the proposed class’ representative plaintiff, Brookdale, Man. farmer Andrew Dennis, together with Jordan Goldblatt and Louis Century, Toronto-based lawyers specializing in civil litigation and class proceedings.
Of the $151 million Dennis claims should’ve gone to farmers who delivered to the CWB, he alleges $145.2 million ended up in the CWB’s contingency fund and $5.9 million was withdrawn from the CWB’s pool accounts.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 price farmers sold at. 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,” Dennis’ statement of claim alleges.
The federal Canadian Wheat Board 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, the federal 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 2011-2012 crop year,” the claim alleges.
“The plaintiff (Dennis) 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.”
‘Not reason enough’
Dennis’ claim, Berthaudin wrote, alleges regulations passed by the federal government raised the upper limit of funds that could be credited from the Contigency Fund, to $200 million from $60 million, after which $145.248 million, otherwise due to be paid to the class, was diverted to the fund.
The government’s argument behind its motion to strike out the statement of claim, Berthaudin wrote, was that the regulations passed were “statutorily authorized to be passed and are validly enacted (and thus) cannot constitute unlawful conduct.”
However, it’s “not plain and obvious to me that the plaintiff could not establish at trial that there was an unauthorized purpose behind the passage of the regulations and the flowing of funds from the pool account to the contingency fund,” he wrote in his dismissal of the government’s motion.
“More particulars may become apparent once documentary discovery has occurred, but that is not reason enough to conclude that the pleading of material facts thus far is insufficient.”
Further, Berthaudin wrote, the government’s other argument — that Dennis’ claim constitutes an abuse of process — relies on decisions from previous CWB-related proceedings, but the judge found the “underlying factual allegations” in this claim are different from those seen in previous rulings.
The judge specifically noted a 2013 Federal Court ruling which shot down most of a previous class action suit filed by Dennis and other farmers. In that ruling, the Federal Court “specifically did not strike out such claims, allowing them to proceed,” Berthaudin wrote.
FCWB, a longtime opponent of the former Conservative government’s deregulation of the CWB’s single desk marketing authority, is backing the proposed class action suit.
— Allan Dawson is a reporter for the Manitoba Co-operator at Miami, Man. Follow him at @AllanReporter on Twitter. Includes files from AGCanada.com Network staff.
