Futures contracts judgment upheld

by BETTER FARMING STAFF

The Ontario Court of Appeal has upheld a Superior Court judgment that awarded Thompsons Limited damages of $108,046.39 for breaches of futures contracts with Triple P Farms of Chatham operated by brothers James, Jerry and Dario Prelaz. The September 2010 Superior Court judgment also awarded $60,000 in costs to Thompsons Limited.

Thompsons Limited CEO Wes Thompson said while they were relieved with the outcome, “I thought it was unfortunate that the whole thing went to court and was appealed . . . You never feel like a winner when you do any of that.”  

Jerry Prelaz, contacted Monday by Better Farming, said he had no comment on the decision.

According to appeal court background notes, the dispute between Thompsons, based in Blenheim, and Triple P goes back to May 2006 when Triple P, which operates as 617987 Ontario Inc., agreed to grow 203 acres of two varieties of soybeans - Renwick and Respond. Under the terms of contracts, Thompsons agreed to pay a seed premium of $1.35 per bushel if the soybeans met “stipulated quality standards.” After testing, Thompsons agreed to pay the seed premium on the Respond soybeans but not on the Renwick soybeans. Triple P objected and sought the premium on both the Renwick and Respond soybeans. A meeting between both parties in January 2007 failed to resolve the dispute which widened in February 2007 when Thompsons said its pesticide spraying contract for the 2007 crop year would not be awarded to Triple P.

Apart from the soybean contract and the 2007 spraying contract, the parties had also entered into a series of nine written contracts whereby Triple P agreed to grow corn and wheat for Thompsons to be delivered in 2007 or 2008 for resale by Thompsons to its customers (the futures contracts in dispute). 

When the disputes concerning the soybean and the 2007 spraying contracts erupted, Triple P threatened not to deliver the corn and wheat crops to Thompsons under the outstanding futures contracts. In early March 2007, one of the Prelaz brothers confirmed this position to Thompsons in a discussion with Bill Foran, a Thompsons’ local branch manager with whom Triple P had dealt for many years. Triple P did not deliver the crops contracted for under the futures contracts. 

Thompsons sued Triple P in two separate actions for damages arising from Triple P’s breaches of the futures contracts. Triple P countersued, claiming damages from Thompsons’ alleged breaches of the soybean and the 2007 spraying contracts.

The appeal decision, written by Justice Eleanore A. Cronk and agreed by justices Marc Rosenberg and David Watt, found that Superior Court Justice Kelly Anne Gorman did not err in her Sept. 16, 2010 judgment against Triple P.

The appeal had questioned whether the trial judge:

•    Failed to address essential elements of Triple P’s defence to Thompsons’ claims on the future contracts;

•    Failed to address Thompsons’ duty to mitigate the damages under the futures contracts and by failing to reduce damages awarded to Thompsons accordingly;

•    Erred in her assessment of the merits of Triple P’s counterclaim by failing to find that Thompsons breached the soybean and 2007 spraying contracts and (in the alternative) failed to address Triple P’s claim that Thompsons negligently misrepresented that the 2007 spraying contract would be awarded to Triple P.

In her finding, Justice Cronk wrote that, “nowhere in its pleading does Triple P assert, as it now claims, that the relationship between the parties was governed by an overall business arrangement consisting of interdependent constituent contracts. Instead, while adverting to the lengthy ongoing business relationship between the parties, Triple P’s pleading specifically and seperately addresses the soybean, 2007 spraying and futures contracts. Thompsons defended Triple P’s counterclaim on the same basis.”

She also noted that the futures contracts expressly provided for cancellation in writing, which neither party supplied. BF