The Saskatchewan Court of Appeal heard evidence Feb. 25 in Input Capital’s appeal of a lower court finding that the company’s canola streaming contracts are “unconscionable.”
The case been reserved.
The Regina company appealed after Queen’s Bench justice Jeff Kalmakoff ruled in May that agreements between Input and Macoun, Sask., farmer Terry Gustafson were almost risk-free for the company but not for clients.
“For a farmer like Gustafson, the benefits appear generous at the front end, but the longer the contracts go on, the smaller the benefits and the greater the risk,” he wrote.
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The court said because the contracts were so heavily one-sided they should be set aside.
The case wound up in court after Gustafson failed to deliver canola to the company in 2014 and 2015 despite receiving more than $4 million up front. Input and Gustafson signed additional contracts even though the latter was facing severe financial pressure.
Kalmakoff ruled Gustafson should repay the $4.5 million he received from Input.
Input Capital president Doug Emsley said the company believes Kalmakoff erred when he said that because the company is larger than Gustafson and his farm, it had disproportionate bargaining power and the contract security should be void.
“If that logic is correct anyone with a loan (at a financial institution) is free to avoid payment because they would clearly be smaller than that institution,” Emsley said in an email. “It makes no commercial sense in our view.”
Meanwhile, an application by those seeking to certify a class action against Input Capital to intervene in the appeal was denied.
