Ont. company faces legal action on several fronts

The CFIA has charged the tomato processor with mislabelling product and faces lawsuits from farmers for breach of contract

A tomato processor in Ontario’s Essex County facing potential legal action from local farmers for leaving most of last year’s contracted crop in their fields is juggling even more legal woes.

And some of the challenges confronting Thomas Canning (Maidstone) Ltd. kindle questions about the complexity of Canada’s labelling system.

The canner and its chief executive officer, William (Bill) Thomas, return to an Ontario Court of Justice in Windsor, Ont., March 9 to tackle charges laid by the Canadian Food Inspection Agency in 2015 concerning alleged misrepresentation of the organic status and country of origin of canned tomato products.

A preliminary hearing begins May 31 to determine if enough evidence exists for a trial to proceed.

The company, which makes regular and organic canned tomatoes under the Utopia brand, and Thomas each face four counts under sections of the Food and Drugs Act, two counts under the Canada Agricultural Products Act and four counts under the Consumer Packaging and Labelling Act.

Thomas faces an additional count under the Canada Agricultural Products Act.

Thomas did not respond to requests for an interview. Neither the company’s lawyer, Laura L. Joy, nor crown attorney Paul Bailey responded to interview requests.

The CFIA could not comment on the matter because it was before the courts, said spokesperson Lisa Murphy.

CFIA information filed at the Windsor Court of Justice alleges the company labelled and sold regular canned tomatoes as organic tomato products and Product of U.S.A. tomato products as Product of Canada to retailers and distributors, including major Canadian grocers such as Loblaw Companies Ltd. and Sobeys.

Maximum fines for conviction on indictment under the Food and Drugs Act and the Consumer Packaging Labelling Act are $5,000 and $250,000 respectively. The maximum fine for an indictable offence under the Canada Agricultural Products Act is $250,000.

Thomas Canning has had other run-ins with the CFIA. Suspensions under processed product regulations in 2014 and 2016 briefly shut down the business’s export and inter-provincial trade privileges. In 2013, the agency confiscated canned tomatoes because of non-compliance “such as misleading labelling under federal processed product regulations.”

Lycoland Farms Ltd. in Leamington, Ont., owned by brothers David and Peter Epp, was among 14 growers the canner had contracted to grow tomatoes last year. David Epp said he was not aware of the charges.

“As a Thomas grower, none of that was revealed to us.”

It should have been, he said.

Epp said he was aware of another lawsuit between the processor and Highbury Canco Corp., another local processor, before he agreed to grow tomatoes for Thomas in 2016.

In a Dec. 1, 2015, statement of claim filed with the Ontario Superior Court of Justice, Highbury Canco claimed Thomas Canning had supplied only partial payment for the 40,000 tons of tomatoes it had contracted Highbury to process into paste that year.

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In April 2016, Judge S.K. Campbell granted a summary judgment in favour of Highbury Canco for $2,565,209.90, the full amount the processor said it was owed.

Epp said he and other growers were concerned about the lawsuit as they headed into the 2016 growing season, but Thomas assured them he would process all the tomatoes at his Maidstone facility and had a $3-million grant from the Ontario agriculture ministry’s rural economic development program to upgrade the aging plant to handle a larger volume.

“We knew we were taking a risk,” Epp said, “but he did have a plan, we had no reason to doubt; he did pay for the tons the year before.”

However, the expansion wasn’t finished in time for most of the harvest. Epp said growers ended up having to abandon three-quarters of the crop in fields because the cannery couldn’t take it.

“He contracted in excess of $5 million and took about $1 million.”

The crops were too spoiled to market elsewhere by the time growers extracted themselves from the cannery contract, he added.

Epp said Thomas paid for crop delivered but not for what was abandoned. Now, growers’ patience has run thin.

Epp and other growers have hired a lawyer, intent on legal action for breach of contract.

If they do file a suit, the growers will follow in the footsteps of 882819 Ontario Limited – D/B/A Morrice Transportation, which sought legal action to recoup $20,000 of unpaid bills from Thomas for cross-border shipping from March to June 2016.

An Ontario Superior Court small claims division judge in Windsor upheld the trucker’s claim in 
September 2016.

Epp questioned how the provincial government could have approved the canner in 2014 for a three-year grant only months after the 2013 federal regulatory violation.

The province requires rural economic development program applicants to comply with all laws and, if they receive a grant, to re-main in compliance for its term.

Kristy Denette, a spokesperson for the provincial agriculture ministry, said in an email that the ministry knew of the 2016 suspension but hadn’t been aware of the 2013 or 2014 violations when the canner’s grant application was approved.

The ministry’s grant agreement is still in effect and ends Dec. 31.

Charles-Antoine Dubois, another ministry spokesperson, said by email the ministry can hold the canner accountable for fulfilling the terms and conditions of the grant.

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This is the second time in recent years that the CFIA has levied far-reaching charges against an agribusiness for labelling violations.

Last year, greenhouse grower Mucci Farms was fined nearly $1.5 million for falsely labelling and selling imported vegetables as Canadian product.

Steve Lamoure, chair of the Ont-ario Fruit and Vegetable Processors Association, calls the charges against Thomas “fairly serious.”

A guilty verdict would affect the entire canning industry.

“We’re trying to do what we have to do, and when somebody (allegedly) tries to circumvent that, it upsets the balance of the other processors.”

Lamoure said labelling requirements for product of Canada are growing increasingly complicated. Even the origin of the can counts.

For southwestern Ontario canners such as Lamoure’s own employer, Sun-Brite Foods Inc. in Kingsville, sourcing Canadian-made cans became a huge hurdle after the 2015 closure of the Crown Metal Packaging Canada LP plant in Chatham, Ont.

Norm Beal, executive director of Food and Beverage Ontario, which represents the province’s processing industry, said concerns are growing about the volume of labelling requirements, particularly for functional food claims.

As the number of requirements grows, so do the cost of compliance and the risk for labelling infractions.

“(Nevertheless), we need checks and balances to make sure that people are not labelling incorrectly or purposely that they are trying to mislead the consumer, which would be a bigger concern.”

He said the issue of mislabelling tends to occur more with imports.

“So we would much prefer to see greater enforcement of these products into our country.”

Erin Cheney, an agrifood research associate at the Ivey Business School at Western University in London, said as labelling becomes more complicated, so too does policing the requirements.

She pointed to a third phase of modernization of federal food labelling regulations now underway.

“Maybe under the new food modernization act, maybe there’s explanation for this, and maybe there’s additional resources,” she said.

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“It will be interesting to see.”