A class action lawsuit filed last week in Regina Court of Queen’s Bench alleges Input Capital Corp. practises predatory lending.
Morris Feduk, who farms near Melville, Sask., and five other plaintiffs from different parts of the province have launched a case against the Regina-based publicly traded company.
Input offers streaming canola contracts in which it pays up front for certain amounts of future canola production.
The plaintiffs say the contracts are unfair and they want the court to find them illegal. They say Input’s interest rates are too high, the company doesn’t provide enough information to those with whom it has contracts and it doesn’t share risk.
The company maintains it has hundreds of satisfied clients and a reputation for honesty and fair dealing.
“We completely deny all of the false allegations and accusations made in the statement of claim,” said president Doug Emsley in an emailed statement. “It is our intention to defend this action vigorously in court where actual facts will matter.”
The company has until later this month to file its statement of defence.
The lawsuit alleges that Input’s contracts didn’t take into account issues such as weather, moisture or lack of moisture, and equipment failures that could affect the amount of production.
“Input assumed at the beginning of each streaming contract that the class member would produce the same amount every year without fail,” said the documents. “The anticipated returns that Input suggested for the multi-year streaming contracts were unachievable over the course of the streaming contracts, given that issues, outside the control of the class member, were preventing crops from being farmed.”
The claim also says that Input took “excessive security” that wasn’t explained to the class members. The class members trusted Input and either didn’t seek, or weren’t given time to seek legal advice, it said.
In Feduk’s case, he owned 26 quarters and rented another six, said the claim. He farmed for a few years with Input but in 2013, after back-to-back wet years, about half his land was too wet to seed.
He had to provide additional security and in 2015 operated with a co-management agreement with the company. Feduk said Input made all the decisions.
“They indicated he could work with them to produce canola under a co-management agreement, or else he would get nothing,” says the claim.
Input decided to farm only 25,000 acres and didn’t pay bills to creditors such as utility companies, the claim says.
Feduk went into receivership and a May 2016 court order sanctioned Input to seize and sell most of Feduk’s equipment at auction. He retained his home quarter, as per provincial legislation, and some vehicles and machinery but Input also gained title to the remainder of his owned land.
The sale included equipment Feduk had borrowed from a friend. In a separate court case against Input Capital a provincial court judge ruled April 19, 2018, for the plaintiff, Robert Matrenga, in the amount of $20,810 for a grain cart and dryer.
Feduk also claimed that during the seizure of his equipment he was assaulted and hospitalized.
The other plaintiffs listed in the class action report similar situations of production shortfalls and failure of Input to make payments and share losses as promised.
“Instead of sharing the risk, Input demanded more and more security against their land, equipment and possessions,” says the claim with regard to Frank, Laurie and Ryan Tomcala of Canora. “Further promises were made that were not honoured, like spring and fall payments on a schedule, statements of deliveries, payments for trucking grain, cash to purchase fertilizer, payments for custom harvesters, inputs for the crop. Input demanded all of the crops.
“Even after the best crop years ever in their history they are still behind with almost every creditor.”
Feduk said it’s time the company is held accountable.
“They’re becoming a real problem in the province here I think,” he said. “They’re destroying families and just running roughshod over many people.”
He said during the 2015 co-management agreement Input employees destroyed his relationships with his landlords and often didn’t pay all the rent. Creditors are chasing him when Input is actually at fault, he said.
“The deal with Input Capital was they were going to sell all of the production for that year, which they did, but they failed to finish paying the bills for that year as well as cash rents,” he said.
Feduk said requests for information from the company about exactly how much he owed were never answered.
A decision in another legal action, between Input and Terry Gustafson of Macoun, Sask., had not been reached as of May 7.
The case surrounds a Sept. 3, 2015, event when Input Capital employees took truckloads of durum from Gustafson’s father’s yard to fulfill a contract. Gustafson argued the company only owned his canola.
According to an affidavit filed by Input Capital in April 2016, Gustafson owed the company nearly $8 million.
The interest charges on his contracts were nearly $3.4 million.