A dispute over an 8,600 tonne Canada Western Red Spring (or CWRS) wheat contract has led a Saskatchewan farm and two associated companies to file a lawsuit against the Canadian Wheat Board seeking compensation and damages of more than $50 million.
The CWB says Hudye Farms of Norquay, Saskatchewan delivered an ineligible CWRS variety, forcing the Board to downgrade 122.5 tonnes of wheat.
"We had taken every measure that we know available to us to make certain that we were delivering what in fact the contract called for," says Ben Hudye, president of Hudye Farms. He says they submitted samples to the Canadian Grain Commission and received certification that the wheat sampled belonged in the CWRS class. He says the Board's grain agent also confirmed this. The farm then entered into an 8,625 tonne delivery contract with the CWB.
According to a statement released by the Hudye Farms, they began delivering wheat in March of 2010. Over 7,419 tonnes had been delivered when the CWB advised the farm that further testing showed that 122.5 tonnes contained 23.6 percent of 606/Granite, an ineligible variety. The board then downgraded the 122.5 tonnes of wheat to feed grade. According to the statement, Hudye Farms was deemed to be in default, so the Board cancelled all their delivery contracts, and claimed damages on the entire 8625 tonne contract.
"We don't want to get into the actual specifics of this case because it's something that will be before the courts," says Maureen Fitzhenry, spokesperson for the CWB. "I don't know the specifics [about the contract cancellation] but all I can say is that things are dealt with on a contract basis. So if there was a contract default for whatever reason, it would apply to the entire contract."
"Farmers sign declarations when they deliver grain that what they are growing and delivering to the elevators will meet their contract specifications in all regards, including being a variety that is eligible for the class for which they are seeking payment," she says. Hudye Farms signed this mandatory declaration in September of 2009.
Hudye acknowledges they have grown 606/Granite in recent years.
"We brought in 606/Granite in 2008, had it in strip trials and again put it into testing in 2009," he says. "We tried very diligently to keep those separated. Obviously in this case, if we believe the testing that was conducted, that has more than likely happened."
"This grain, or the vast majority of it, was shipped to Thunder Bay and later shipped to Baie-Comeau. 606/Granite is grown extensively in Ontario and the chances of it becoming co-mingled at any one of those ports, whether it be Thunder Bay or Baie-Comeau, or even in the transportation method, whether it be railcar or lakers, is quite high itself," says Hudye.
The lawsuit, filed in the Saskatchewan Court of Queen's Bench, seeks $247,699 plus interest from the CWB for improper loss of income and additional expenses. It includes $10 million in damages for breach of fiduciary duty and $15 million in exemplary and punitive damages. Hudye is also seeking $25 million for alleged defamation after the CWB sent a notice, specifically naming Hudye Farms, to Yorkton-area elevators.
Listen to Glenda Lee Allen's conversations with Ben Hudye and Maureen Fitzhenry:
~ Monday, November 22, 2010 ~