The cost of not playing by the rules - a textbook case of "theft by conversion?"

Good Day Readers:

A special thank you to the people who have been sending us updates on the current situation vis-a-vis the Canadian Wheat Board.

We'd be the first to admit we're not well-versed regarding the grain trade in Canada, however, two indisputable facts jump out at us and stick in our craw:

(1) Had The Harper Government respected the Rules of Parliament and Democratic Principles much, if not all, of this could have been avoided

(2) THG has failed miserably, by design or otherwise, to accurately convey to taxpayers the cost of its decision as evidenced by the fact only last summer did it publicly announce a major accounting house had finally been retained to do a cost- benefit analysis something that should have been done long, long before now. How will the incomes of western Canadian grain produces and those associated with the industry likely change? What will be the impact on consumer prices and ultimately the financial burden taxpayers will be forced to bear? None of this has been adequately addressed.

Read on.

Sincerely,
Clare L. Pieuk
__________________________________________________
First this .....

Proposed farmers' suit seeks claim on CWB's assets

Class-action maven Merchant says $15.5B" must be paid
Monday, January 9, 2012
Staff

One of Canada's most prolific class-action lawyers says he plans to seek an 11-figure piece of the Canadian Wheat Board's assets for Prairie farmers.

Filing a statement of claim Monday in Saskatoon on behalf of representative plaintiff Duane Filson, Regina lawyer Tony Merchant said in a release that those assets, including the CWB's office building, rail cars and cash on hand, "cannot simply be subsumed by the federal government."

Filson, a farmer, cow-calf producer and municipal reeve at Woodrow, Saskatchewan about 150 km southwest of Moose Jaw, is the plaintiff representing a proposed "class" of all farmers who sold grain to the CWB in 2011 and will sell through the CWB before August 1, 2012.

Merchant's proposed suit describes the CWB as a trustee de son tort -- a body that takes on itself the possession of entrusted property -- for farmers, whose money went to set up the CWB's contingency fund, buy the CWB's tangible assets and develop its "intangible assets."

In its form following last month's passage of Bill C-18, which as of August 1 will end the Board's single marketing desk for Prairie wheat and barley, the "government CWB" has been "unjustly enriched" and farmers "deprived of the funds" from those assets, the suit alleges.

The suit's claims call for total damages of $15.42 billion, including estimated values of:

• $7.7 billion in "logistics and transportation savings," considered an "intangible asset" for farmers
• $2.14 billion, for the net present value of "premium sale prices" obtained each year for barley
• $5.3 billion for similar annual premiums on wheat sales
• $100 million in the CWB's contingency fund
• $102.06 million, for the CWB's rail hopper cars
• $65 million, prepaid for the purchase of grain laker vessels; and
• $14 million, for the CWB's downtown Winnipeg office building

"A corporate dissolution requires surplus funds, proceeds and assets to be returned to appropriate creditors and stakeholders," Merchant's statement said.

The dissolution of the pre-Bill C-18 CWB "therefore requires the return of all funds, proceeds and assets... back to the Class, the rightful owners of the CWB value."

"This case does not challenge whether or not dismantling the CWB is a good idea," said Merchant, a former provincial Liberal MLA and federal Liberal candidate (1979, 1980, 1997). His representative client also ran for the Liberals in 2008 and 2011.

"The value realized from CWB assets has to be returned to farmers," Merchant said in a release. "To do otherwise, would resemble a classic case of theft by conversion."

The Reuters news service on Monday quoted federal Agriculture Minister Gerry Ritz as saying it was "disappointing to see further misguided legal action against western Canadian farmers and their right to the same freedoms as farmers in Ontario already enjoy."

The "baseless action," Ritz said, would not affect the deregulation process laid out in Bill C-18, nor would it affect Prairie farmers' ability to forward-contract wheat or barley for delivery on an open market after August1.

Merchant's office is accepting contact information from farmers interested in the proposed suit. The statement of claim noted it's to be formally served on the federal government sometime within the next six months.

Related stories:
Conservatives' CWB bill clears Senate, royal assent, December 16, 2011
Suit over canola growers' lost laptop dropped, April 23, 2010
Farmers to sue CN, CPR over hopper car costs, November 6, 2009


Followed by .....

NDP leadership hopeful would undo wheat board change

A class action lawsuit was launched in Saskatoon Monday seeking $15.4 billion in damages resulting from changes made by the Harper government to the Canadian Wheat Board.

Plaintiff Duane Filson, a farmer, teacher and municipal politician from Woodrow, Saskatchewan represents a class that could include any Prairie grain farmer who sold wheat or barley to the Canadian Wheat Board in 2011 or 2012.

Merchant Law Group LLP launched the suit on farmers' behalf. Class action lawsuits must be certified by a judge before they can proceed, and the claims in the suit have not been proven in court.

Merchant expects the first court date to consider the certification of the class in about two months.

"This lawsuit is not about the single desk [monopoly marketing system]," said Tony Merchant. "If you're going to make changes, you have to compensate," Merchant said, noting that when the federal government ended the Crow Rate subsidy for shipping grain by rail, farmers were compensated.

Documents filed in court say that farmers should be compensated for losing all of the Wheat Board's assets at the time the government's changes took effect: $100 million in cash, over 3,000 rail cars, the prepaid purchase value of lake freighters for shipping grain by sea, an office building in Winnipeg and other intangible assets, as valued by experts for the purpose of the lawsuit. Part of the claim includes damages for lost price premiums previously obtained with the selling power of the Board's monopoly.

The Wheat Board had operated as a shared governance organization since 1998, with farmer-elected Directors constituting the majority of the representatives on its Board. Proceeds from the Board's sales were returned to Prairie grain farmers.

Legislation that received royal assent December 15 ended the wheat board's monopoly over marketing prairie wheat and barley. The eight remaining farmer-elected Board members were dismissed, leaving five government-appointed directors in charge of the organization's future.

The Board continues to operate for the 2012 crop year and beyond as a voluntary seller for Prairie grain farmers, who may now also sell to other private sector buyers in an open market.

After a five-year transition period, the government appointees who now manage operations will determine if the Wheat Board can continue to operate as a viable voluntary organization in an open market. If it cannot, it could be dissolved by the government altogether.

Changes ended farmers' control

The lawsuit argues that when the changes were made, sole control over the Wheat Board moved out of farmers' hands and into the government's, despite the fact that it will continue to exist as a voluntary seller. "A corporate dissolution requires surplus funds, proceeds and assets to be returned to appropriate creditors and stakeholders," the lawsuit argues. "The dissolution of the [farmer-controlled Wheat Board].… requires the return of all funds, proceeds and assets accumulated … back to the class, the rightful owners of the CWB value."

The lawsuit deems the legislation as having "unlawfully repurposed" tangible and intangible assets of farmers, causing $15.4 billion in estimated damages and removing all the value and benefits derived from the previous marketing system.

Further, it argues that the government has "wrongfully and intentionally interfered with the business relations" between the plaintiff, the Wheat Board and the former farmer-elected Directors. The lawsuit claims a "breach of implied trust" to maintain the Wheat Board's assets to the benefit of the farmers it served, and claims that the new voluntary Wheat Board controlled by the government has been "unjustly enriched" by the changes.

"How can a voluntary Wheat Board function? What can they offer?" Merchant said. "Economists say it isn't going to work and those assets will be dissipated."

"Farmers say give me my share right now. I don't want to go into that new gamble," Merchant says.

"Our government has delivered marketing freedom for western Canadian farmers and we will continue to work with farmers to make sure the CWB remains a viable marketing option," said Agriculture Minister Gerry Ritz in a statement Monday.

"It's disappointing to see further misguided legal action," the statement says, adding that this "baseless action" does not affect the arrival of an open market for prairie wheat and barley as of August 1, 2012.

And finally .....

For Immediate Release                                                                                                          

January 5, 2012                                                           

Former Directors for CWB Democracy Instruct Legal Team

CWB Region:  “We feel that asking a Federal Court Justice to quash the government’s appeal of the December 7 decision is appropriate”, said Allen Oberg, former Chair of the Canadian Wheat Board (CWB).  “By ignoring the Federal Court of Canada decision the Harper government has again left us with no alternative.”

In December of 2011 Federal Court Justice Campbell ruled that the government is bound by the CWB's democratic process established by Parliament in 1998. Justice Campbell said that "(T)he minister must act democratically... Not adhering to these values is not only disrespectful, it is contrary to law." The intent of Parliament was "not to alter this structure without consultation and consent" according to Justice Campbell and the tens of thousands of western farmers that were familiar with Section 47.1 of the CWB Act.

Immediately after the ruling however, the Harper government stated that it would not be bound by the law or the courts and the government moved ahead to implement Bill C-18 which would destroy the single desk marketing advantages of the CWB. (There have apparently been three times in Canadian history when the Federal government has ignored a ruling from the Federal Court, and all three have occurred since 2006 when the Harper government was installed.) At the same time the government moved to appeal the Federal Court ruling.

“We believe that the Harper government should have to choose—either the government moves ahead to dismantle the CWB without a vote of farmers, or they continue with their efforts to reverse the decision at appeal—but they should not be able to do both at the same time,” continued Bill Toews, farmer in Manitoba and former CWB Director.

“The Harper government broke the law and insulted farmers when they took away the farmers’ right to vote on changes to the CWB,” concluded Oberg.  “The government’s action was not legal, fair or constructive, and the government continues to create a huge amount of uncertainty for the western grain trade.  We are urging all farmers and Canadians in general to support our actions by visiting www.friendsofcwb.ca and becoming personally involved.”

                                                         

For more information:

Allen Oberg, Forrestburg Alberta: 1-780-385-1124
                                      

Bill Woods, Eston, Saskatchewan: 1-306-962-4477

Stewart Wells, Swift Current, Saskatchewan: 1-306-773-6852
                                   

Cam Goff, Hanley Saskatchewan: 1-306-544-2526

Rod Flaman, Edenwold Saskatchewan: 1-306-771-2823

Kyle Korneychuk, Pelly, Saskatchewan: 1-306-537-0950

John Sandborn, Benito, Manitoba: 1-204- 539-2176

Bill Toews, Kane, Manitoba: 1-204-343-2002