A Calgary judge needs the wisdom of Solomon to decide who owns 6,300 head of cattle in a central Alberta feedlot that was placed into bankruptcy protection in January.
In February, justice J. B. Romaine asked receiver Deloitte & Touche to decide the ownership of cattle in the Bonnett Farms feedlot at Ponoka.
The CIBC bank is fighting with 11 cattle producers over who owns the cattle. After reviewing the documents, the receiver said it can’t determine which party owns the cattle and has thrown it back to the judge to make the decision.
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“We’ve had competing claims. We’re basically throwing the cattle in the air and saying,’they’re not ours.’ We’ve got two different parties that want them,” said Vic Kroeger, senior vice-president with Deloitte & Touche in Calgary on March 10, the day before the receiver went back to the Court of Queen’s Bench judge.
“Let the sides fight over it,” said Kroeger, who added it did release 350 cattle from two owners who had sufficient documents of ownership.
“The rest are caught,” he said.
The receiver rejected claims for 4,743 cattle and allowed 2,119 cattle. The bank claimed ownership in cattle from both groups.
On March 11, justice K.M. Horner granted the receiver permission to sell the cattle that are ready for market and place the money into trust until a decision can be made on ownership. Both sides go back to court March 21.
Early in the receivership process, producers who had cattle in the Bonnett Farms feedlot staked their claim. Eleven producers said they owned 7,043 cattle even though there were only 6,172 cattle in the lot at the time of bankruptcy.
In a Dec. 31 letter to the receiver, the lawyer for Ron McCullough wrote: “This is to advise that our clients’ records show that 2,841 head of our clients’ cattle are, or should be, in the possession of Bonnett Farms. Our client holds bills of sale evidencing their ownership interest in these animals and, as mentioned above, they carry our clients’ brands being either i over i on the right hip or z over i on the right hip,” he wrote.
At the same time lawyers for CIBC claimed priority for the cattle in the feedlot, saying it had “better rights to such cattle and has demanded that the receiver not part with possession of such cattle,” note the court documents.
There were no books or records of Bonnett Farms that account for any third-party claim of the cattle, said the bank in court documents. When the feedlot was placed into receivership, it owed $38 million to the bank and other creditors.
In letters to the receiver earlier this month, the lawyers for CIBC advised the receiver’s lawyer that “CIBC asserts a priority claim to cattle in possession of the receiver and claimed by Morningside Ranches, Jim NcNall, Ponoka Livestock Co-op Ltd., Don Hildebrand, Ben Sieben and Don Williams. The letters from CIBC contain a demand that the receiver not release the possession of cattle to the afore-mentioned cattle claimants.”
After the ownership has been sorted, this case may force permanent changes to the way cattle are registered and how ownership changes hands in the province, said Kroeger.
“This is going to change the way producers and feedlot operators operate and hopefully for the better. Right now it’s been the old boy’s network and that doesn’t work any more. Everything should be more crystal clear. It should be more formal,” he said.
Cliff Munoe, head of Alberta Agriculture’s Regulatory Services Division, said if the court sides in favour of the bank, it will seriously affect all legislation of cattle ownership in the province, especially where cattle feeder associations are involved.
“It has serious consequences if the decision goes against all the producers and the feeder co-ops who have proved ownership,” said Munroe.
The government is undergoing a review of legislation for Livestock Identification Services, the organization now charged with cattle identification. Any outcome will force legislation to ensure that title of the cattle changes hands when cattle are bought.
“This is an opportunity to look at forming a registration and tightening up legislation in regards to ownership,” Munroe said.
