Ontario court upholds Burnbrae's removal from egg industry case

Tuesday, January 6, 2015

by SUSAN MANN

Sweda Farms Ltd. is planning to seek leave to appeal to the Supreme Court of Canada a recent Ontario Appeal Court decision upholding an earlier court ruling dismissing Sweda’s legal actions against egg grader and producer Burnbrae Farms Limited.

Sweda’s lawyer Don Good said “we’re working on the application as we speak.” He added that “we think it’s appropriate” that Burnbrae remains in the action.

Sweda Farms Ltd and its related companies, Best Choice Eggs Ltd. and Tilia Transport Inc. has launched legal action against Egg Farmers of Ontario; Harry Pelissero (who is Egg Farmers general manager) Burnbrae Farms Limited and its related companies - Burnbrae Holdings Inc. and Maple Lynn Foods; L.H. Gray & Son Limited; William Harding Gray; John Klei and the Estate of Johannes Klei. Sweda, which was Ontario’s third largest egg grader, alleges Burnbrae, the province’s largest grader, and L.H. Gray, the second largest grader in Ontario, along with others involved in the lawsuit conspired to undermine its business. The lawsuit began as two separate cases in 2005 and 2008 but was merged into one case in 2011. The allegations have not been proven in court.

In February 2014 Judge David L. Corbett of the Ontario Superior Court of Justice dismissed all of Sweda Farms Ltd. and its related companies legal actions against Burnbrae and its related companies. Sweda appealed that decision to the Ontario Court of Appeal, which heard the case and released its decision orally Dec. 1, 2014. Good said they received written copies of the decision later.

The Appeal Court judges, John Laskin, R.A. Blair and S.E. Pepall, said in their written decision they dismiss Sweda’s motion for leave to introduce fresh evidence consisting of affidavits of Svante Lind (Sweda’s owner) and Norman Bourdeau (a former L.H. Gray employee who referred to himself as a whistleblower) and numerous additional documents.

The judges also didn’t accept Sweda’s submission that it was premature to remove Burnbrae from the legal action because Corbett had only two per cent of the evidence when he made his decision.

They noted Good said several times during oral arguments Corbett had only two per cent of the evidence because Burnbrae had not provided the remainder.

However, the decision points out Burnbrae delivered documents in May 2012 and the motion to remove Burnbrae from the legal action wasn’t heard until 17 months later, in October 2013. If the Sweda side’s complaint was that Burnbrae didn’t comply with its disclosure obligations, the Sweda side was obligated to take steps to compel production – and had plenty of time to do it.

“They did not do so,” the appeal decision says. “Accordingly they did not meet their obligation to put their best foot forward on the motion.”

Good said he wasn’t very happy with the Appeal Court’s decision. He added it was a misconception before Corbett that they didn’t vigorously pursue obtaining the documents they needed for the case. “We had laid out in an affidavit very clearly the steps we had taken and attempted to enforce. That will be one of the issues we will take up to the Supreme Court.”

He added that the “obligation is on the party to obey the rules. It shouldn’t be left that if you make reasonable steps and they didn’t obey the rules they turn around and say you didn’t do enough. How much is enough?”

The documents the Sweda side needed that it’s claiming Burnbrae didn’t provide  included grading data, audits, and Canadian Food Inspection Agency inspection records. “Two per cent is pretty accurate; that’s about all we had,” Good noted.

As for the court costs, Burnbrae’s costs were set at $85,000 but the Appeal Court refused the Sweda side’s appeal of those costs. If the Supreme Court of Canada refuses to grant leave to hear the case, the Sweda side will have to pay those costs.

Good said it will take several months before their leave to appeal to the Supreme Court is filed, and then it will take a couple more months before the court notifies them if leave to appeal is granted or not.

Margaret Hudson, president of Burnbrae Farms Limited, and David McCutcheon, Burnbrae’s lawyer, couldn’t be reached for comment. BF

With files from Better Farming Staff.