Canadian Wheat Board loses appeal in negligent misrepresentation case dating from 1982

In late August 1982, widespread frost damage occurred to Western Canada’s premier Canada Western Red Spring wheat (CWRS), resulting in significant degrading of the crop. The Canadian Wheat Board (the CWB), along with the Canadian Grain Commission (the CGC), elected to market the damaged wheat under the specification “Wheat – Ex. Special Bin” (WSB) on the basis, despite its visual degradation, that it “possesses what is known as ‘fair’ milling quality and would be quite suitable for milling purposes.”

Pagnan S.p.A., an Italian corporation, purchased a large quantity of WSB from ConAgra Limited (Agro), an accredited CWB exporter. When the first cargo of wheat was delivered to Italy, it was found to be inferior and not of fair milling quality. Pagnan and Albionex together (Pagnan having sold, then repurchased the cargo from the other plaintiff, Albionex (Overseas) Limited) commenced an action in 1985, claiming against Agro for breach of contract and against the CWB based on the representations made with respect to the characteristics and quality of WSB. Agro crossclaimed against the CWB, asserting that it too had relied upon the CWB’s representations.

The trial judge in the Manitoba Court of Queen's Bench delivered lengthy reasons for decision in July 2009, holding Agro liable to the plaintiffs for breach of contract and the CWB liable for negligent misrepresentation. Agro’s crossclaim against the CWB was allowed. Judgment was eventually entered in favour of the plaintiffs and against the defendants jointly and severally in the amount of $4,642,392.40, inclusive of interest to the date of judgment, plus costs. Judgment was also entered (in favour of Agro) in a similar amount against the CWB.

Agro and the CWB then appealed their liability and damages, and the CWB appealed Agro’s crossclaim judgment. The plaintiffs also cross appealed, arguing that damages should be increased.  None of these appeals or cross-appeals succeeded at the Court of Appeal.

Read the decision at: Albionex (Overseas) Ltd. et al. v. Conagra Ltd. et al.

Saskatchewan lawsuit against CWB moved to Manitoba

In December, I wrote about a Saskatchewan farm, Hudye Farms of Norquay, SK, suing the Canadian Wheat Board (CWB) for loss of income, breach of fiduciary duty and defamation: SK farmer sues CWB.  In response to the suit, the CWB made a motion to the Court of Queen's Bench for the following relief:

1. Challenging the Saskatchewan Court’s territorial competence over the Canadian Wheat Board or these proceedings under The Court Jurisdiction and Proceedings Transfer Act, S.S. 1997, c. C-41.1 as am. (“CJPTA”);

2. In the alternative, the defendant Canadian Wheat Board asked the court to decline to exercise any territorial competence pursuant to Rule 99 of the Queen’s Bench Rules and ss. 10(1) of the CJPTA on the basis that the courts of Manitoba are a more appropriate forum in which to hear these proceedings;

3. An order pursuant to ss. 12(1) of the CJPTA transferring the proceedings to the courts of Manitoba; and

4. For costs on a solicitor client basis.

The plaintiffs and the CWB agreed that they were contractually bound as producer and marketing board. Much of the argument and dialogue therefore focused around defining the contract, the role of Cargill Limited as the producer’s agent, and, the effect of a term in the contract which provides that the law of Manitoba will apply to any disputes and that the courts of Manitoba shall have exclusive jurisdiction over any proceedings arising out of the commercial contract and relations created by the contract.
The Court was left to decide whether the Saskatchewan action should be stayed because the proper forum for the lawsuit was Manitoba:

It is undisputed law that Hudye Farms Inc. bears the onus and burden of proving strong cause as to why a stay should be denied the Canadian Wheat Board in the face of the forum and choice of law clause. The language of the forum and law selection clause is clear and unambiguous. Refer again to the quotation from E.K. Motors at paragraph 13, quoted earlier. Then consider further Barclay J.’s three step analysis in the Willick decision also quoted earlier. If the Manitoba courts have jurisdiction over these disputes/proceedings, should this Saskatchewan action be struck, stayed or transferred to the Manitoba courts? If Manitoba courts do not have exclusive jurisdiction, should this action be transferred to the Manitoba courts pursuant to the CJPTA?

In the end, the Court found that the proper forum based on the contract was Manitoba, and so an order has been made transferring the case to the Manitoba courts.

Read the decision at: Hudye Farms Inc. v. Canadian Wheat Board.

Saskatchewan farm sues Canadian Wheat Board for lost income, defamation

Hudye Farms of Norquay, Saskatchewan has launched a multi-million dollar lawsuit against the Canadian Wheat Board (CWB).  The action in the Saskatchewan Court of Queen's Bench seeks $247,699 from CWB for loss of income and other expenses.  The action also seeks $10 million in damages for breach of fiduciary duty and $15 million in exemplary and punitive damages.  The action seeks a further $25 million in a claim related to alleged defamation resulting from a notice sent out by CWB to Yorkton-area elevators.  The notice specifically named Hudye Farms.

The dispute arises out of a decision by CWB to downgrade 122.5 tonnes of wheat delivered by Hudye.  Hudye had a contract with CWB for delivery of 8,600 tonnes of Canada Western Red Spring Wheat, but CWB found that 122.5 tonnes of the wheat that was delivered contained 23.6 percent 606/Granite wheat, an ineligible variety.

Read an article about the lawsuit at: portageonline.com.