Canola-streaming contracts are not as “unconscionable” as a judge thought last year, according to other judges who have reviewed a recent case.
The Saskatchewan Court of Appeals sent a case between a farmer and Input Capital Corp. back to a lower court last week.
Macoun, Sask., area farmer Terry Gustafson’s dispute with farm finance provider Input Capital of Regina was initially settled a year ago in May, with the Court of Queen’s Bench ruling, in some parts, in Gustafson’s favour.
Justice Jeffery Kalmakoff, now of the appellant court, ruled last year that the lender’s conditions were unfair to the producer, and let Gustafson off the hook for some parts of the debt relationship, including some security that was pledged to Input Capital.
In the initial ruling, Gustafson had to repay $4.4 million in loans after not delivering the canola he contracted, but Kalmakoff ruled that the relationship between the lender and farmer had become out of balance, leaving the farmer vulnerable to the terms of new agreements and rollovers.
In the new ruling, the appellant court wrote that “the evidence and the agreements establish nearly the opposite conclusion to the one drawn by the trial judge … it was Gustafson that had little to no risk under the streaming contracts.”
Kalmakoff did not take part in the appeals court deliberations.
The appellant court ruled that the farmer failed or declined to deliver any canola to Input Capital in 2014 and 2015.
In the earlier hearings it was found that he sold 2,750 tonnes of canola during 2015 to grain buyers that were not Input Capital, “plainly selling again the canola it had already sold to (the lender).”
Judge Neal Caldwell found, acting on behalf of the appellant court, that Kalmakoff “erred in his interpretation of the agreements and misapprehended the contractual relationship between the parties.”
In a statement, Doug Emsley, who heads Input Capital, said the streaming contracts the company provides are “fair, balanced and reasonable, and this decision confirms that.” He said the ruling is also important to the company because the “cloud of uncertainty is removed” with respect to its farm clients.
The Western Producer was unable to contact Gustafson for comment on the decision.