Federal court upholds rejection of CWB lawsuit

Smaller suit still possible | Group says it will continue legal action against the Canadian government

Farmers attempting to sue Ottawa for $17 billion over the dismantling of the single desk CWB are again exploring options following a Federal Court of Appeal ruling.

The Oct. 15 ruling upheld a previous court decision that rejected most claims contained in a $17 billion class action suit that farmers launched against the federal government and CWB.

The suit was launched in 2012 by four prairie grain growers and is supported by Friends of the Canadian Wheat Board (FCWB).

Stewart Wells, a spokesperson for the claimants, said the fight is not over, despite the most recent ruling.

He said the plaintiffs have two remaining options: seek to have their arguments heard by the Supreme Court of Canada or proceed with a reduced class action claim worth hundreds of millions of dollars.

The plaintiffs are expected to make a decision within the next week or two, Wells said.

The suit claims that Ottawa’s decision to end CWB’s single desk marketing monopoly will cost prairie producers $17 billion in lost revenue and confiscated CWB assets.

That claim was partly based on the value of CWB property, including ships, hopper cars and a Winnipeg office building, which were transferred from the farmer-directed wheat board to the new post-monopoly CWB as of Aug. 1, 2012.

Also included in the claim were hundred of millions of dollars worth of pool revenues which, according to plaintiffs, should have been paid to farmers but were instead retained by the CWB to bolster an internal contingency fund and cover costs such as employee severance packages, pension liabilities and other transition-related expenses.

In a court judgment last December, federal judge Daniele Tremblay-Lamer rejected most of the farmer claims relating to confiscated property, suggesting federal legislation that ended CWB’s single desk “(did) not divest the plaintiffs of property nor (did) it divest the CWB of its property since the CWB is continued and it continues to own the contingency fund along with its other assets.”

However, Tremblay Lamar also ruled that a reduced class action suit should be allowed, saying the government and CWB may have deprived prairie farmers of some pool payouts during the 2011-12 crop year and may not have established “a reasonable price for grain remaining unsold after the 2011-12 pool period.”

The plaintiffs initiated an appeal of Tremblay Lamar’s decision early this year.

It was that appeal that was rejected in the Oct. 15 decision from Ottawa.

A secondary appeal was also dismissed. It was launched by the federal government and sought to have all claims against the federal government and CWB dismissed.

Andres Bruun, a Winnipeg lawyer, said his clients must now decide to proceed with a reduced claim or attempt to have their arguments heard by the Supreme Court.

“We have a very clear green light to proceed with the class action in respect to monies that were improperly withheld from farmers in the 2011-12 crop year,” Bruun said.

“Those monies were withheld to cover severance pay, pension expenses and numerous other expenses. Those (monies) were not paid out to producers as they should have been.”

A reduced claim by class action participants would include $125 million that was directed from pool accounts into the CWB contingency fund during the 2011-12 crop year.

Bruun said a reduced claim would likely be valued in the “low hundreds of millions of dollars.”

He added that the exact value of a reduced claim could be difficult to establish, given that the CWB’s financial results have not made public since July 31, 2012.

Sources in the grain industry have said the CWB privatization process is underway and that a short list of potential buyers or corporate partners is likely to be established before the end of the year.

It is widely believed CWB is seeking to partner with a corporate investor to provide a pool of investment capital.

Outstanding legal claims against the CWB could hinder that process or at least emerge as a fly in the ointment.

CWB has declined to comment.

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