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.

Appeal Tribunal dismisses challenge to poultry export rules in Ontario

Henry Bos is a chicken producer from the Niagara peninsula who wanted to sell more of his production to chicken processors in the province of Quebec. Since November 2009, as a result of a moratorium created by regulation, Mr. Bos has been capped at selling about 20% of his production to a Quebec processor and the balance of his production to Ontario processors.

Amendments to a 2005 regulation governing contractual arrangements between Ontario chicken producers and out of province processors, and a 2005 policy governing chicken production and marketing quotas implemented the 2009 moratorium.  Mr. Bos challenged the policy and regulation amendments.  The essence of his challenge was that the effect of those amendments removed his freedom to sell his chicken to whomever he chooses.  He explained, in his evidence and his arguments, that the "core character" of the impugned policy amendment and regulation amendment is to control the inter-provincial movement of chicken, and that control was beyond the jurisdiction of the marketing agency, the Chicken Farmers of Ontario (CFO).  He testified the impugned policy amendment and regulation amendment prevent him the freedom to market more than 9,025 quota units inter-provincially.  The 9,025 quota units reflected the level of Mr. Bos' contracts with a Quebec processor at the time when CFO introduced the moratorium in November 2009.

The Agriculture, Food and Rural Affairs Appeal Tribunal found that the policy and regulation amendments were within the powers of the CFO as granted by the province of Ontario.  The moratorium, the Tribunal ruled, fell within the regulation of chicken marketing in Ontario.  The moratorium was part of the control of marketing transactions within Ontario.  The fact that it temporarily and incidentally capped exports out of province did not affect the finding that the regulation and policy amendments were ones the CFO was authorized to make.  The Tribunal also noted that the moratorium is being phased out.

Read the decision at: Henry Bos vs. Chicken Farmers of Ontario (CFO).

Virtually no defence available - fines against Manitoba cattleman upheld

The Canada Agricultural Review Tribunal has imposed several $500 administrative monetary penalties on a Manitoba farmer named Gordon Kropelnicki. The penalties result from a breach of the health of animals regulations administered by the Canada Food Inspection Agency (CFIA). In particular, Kropelnicki was alleged to have failed to retire the tag numbers of several cattle there were exported to the United States in 2009.

On March 16 and 17, 2009, Kropelnicki exported 33 cattle to the United States via Pembina, North Dakota. In August, 2009, Kropelnicki received a letter of warning sent from the CFIA stating that three of the cattle he had transported to the United States had not had their identification tag retired within 30 days of their export. The warning letter said that the farmer must bring himself into compliance with the section by retiring the tags no later than September 15, 2009. Kropelnicki took no steps on his own to retire the tags. Instead, Kropelnicki says that he called the veterinarian clinic in Glenboro on August 29 or 30, 2009 to have them retire the tags and that the clinic said that they would do so. However, the clinic did not retire the tags.

According to the chairperson of the Appeal Tribunal, Dr. Don Buckingham, the “undeniable facts” of the case are:

That Kropelnicki shipped his cattle to the U.S.A. and their tag numbers were not retired on or before September 15, 2009. The Tribunal has no reason to doubt that Kropelnicki fully relied on the Glenboro clinic to carry out his wishes and to protect his interests by retiring the tag numbers of the cattle exported to the U.S.A. It is clear that Kropelnicki took some preliminary steps to have the tags retired to meet his obligations and the agency’s August request. Unfortunately for whatever reason, the retirement of the tags did not occur prior to September 15, 2009.

In his decision, Buckingham notes that Section 18 of the applicable legislation excludes practically any excuse that Kropelnicki might raise in the case. Given Parliament’s clear statement on the issue, Buckingham accepted that due diligence statements by Kropelnicki are not permitted defences under the applicable legislation. Moreover, reliance by Kropelnicki on individuals who are acting as his agents in the export transaction to the U.S., is not a defence to the violation alleged in the case.

In light of those findings, the Tribunal rejected the appeal and imposed the administrative monetary penalties required under the leglislation.

Read the decision at: Kropelnicki v. Canada (CFIA).