Frozen wheat lawsuit goes against CWB

The Manitoba Court of Appeal has upheld a lower court ruling finding the Canadian Wheat Board liable for negligent misrepresentation in a 1983 wheat sale and must pay $4.6 million in damages, plus costs.

The Dec. 14 ruling by Chief Justice Richard J. Scott stems from a trial held in 2009.

Wheat board spokeswoman Maureen Fitzhenry said in an interview Dec. 15 the board is still considering whether to seek leave to appeal to the Supreme Court of Canada.

A widespread, severe frost in August 1982 damaged much of Western Canada’s wheat that year. The board marketed the wheat as "Special Bin," stating in a letter that despite the visual damage the wheat "possesses what is known as fair milling quality and would be quite suitable for milling purposes."

Agro Company of Canada (now owned by ConAgra Foods), an accredited wheat board exporter, bought some of the wheat from the board and in 1983 sent two shipments totaling around 25,000 tonnes to Italian grain trader Pagnan as part of an order of 96,000 tonnes.

Pagnan later asked Agro to substitute importer Albionex (Overseas) Ltd., a company incorporated in the Channel Islands, as the initial buyer, to which Agro agreed.

Pagnan had presold the wheat and soon received complaints about its quality. Agro refused to take it back and Pagnan ended up disposing of it. Albionex refused to accept the rest of Agro’s shipment.

Pagnan and Albionex (Overseas Limited) sued the wheat board and Agro in 1985. And Agro sued the board alleging it was also misled by the board. The trial didn’t begin until 2007.

The wheat board appealed Agro’s claim but the appeal court ruled Agro was also misled.

"This is a case, simply put, is about a 30-year-old misunderstanding," Fitzhenry said.

"We believed the customer was well aware of the quality parameters that they were buying. We felt we were very clear with them and the accredited exported who actually connected the sale. The court has seen it differently."

— With files from Reuters. Allan Dawson is a reporter with the Manitoba Co-operator at Miami, Man. This article originally appeared in the Co-operator, Dec. 22, 2011, page 8.

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