Saskatchewan Wheat Pool continues to be haunted by its ill-fated investment in a grain terminal project in Poland in the late 1990s.
Last week the pool was in court in Regina arguing that it should receive immediate payment of more than $2.5 million US it says a former partner in the now-abandoned terminal project owes it.
But the provincial court of appeal rejected the pool’s request, saying the dispute between the pool and Aecon Group Inc. and its subsidiary Strait Crossing Group Ltd. should be resolved in a trial.
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Pool lawyer Reg Watson expressed disappointment in the ruling, saying it will probably be about two years before a trial starts.
“It would have saved a whole pile of money if we could have done this on a summary basis,” he said in an
interview.
In 2001 the pool launched a lawsuit against Aecon and its subsidiary Strait Crossing Group after they failed to make a $2.5 million payment to the pool due July 12, 2001.
In December 2000 the pool sold its interest in a planned grain terminal in Gdansk, Poland, to Strait, its former partner in the venture, for $7 million.
As part of that deal, the pool received an initial payment of $500,000 and a promissory note and guarantee that a $2.5 million installment would be paid by July 12, 2001. Another $1 million was to be paid upon completion of construction, with the remaining $3 million to be paid by July 2006 out of operating cash flow from the terminal, which has never been built.
When the $2.5 million payment was missed, the pool sued Strait and Aecon, and asked the Court of Queen’s Bench to order immediate payment without going to trial.
Aecon responded with a counter suit, saying it didn’t have to make the payment because the pool breached the sales agreement by failing to provide Strait with certain documents.
In December 2002 the Court of Queen’s Bench rejected the pool’s request, saying the case was so complex a trial was required.
Then at the court of appeal, the pool unsuccessfully argued that while the deal as a whole may be complex, the issue of the missed payment is straightforward.
“This is a simple claim about a promissory note and guarantee,” said Watson.
Both the suit and the counter suit will be dealt with in one trial before Court of Queen’s Bench. No date has been set.
The pool got involved in the Gdansk project in 1996 as part of a strategy of expansion and globalization under former chief executive officer Don Loewen.
The pool announced its intention to pull out of the project in May 2000, after taking a $38 million write-off against earnings in 1999-2000 for losses relating to the project.
