OSHAWA – Thousands of pages of court documents here outline allegations of conspiracies to make business life difficult for Sweda Farms Ltd., a business owned by Svante Lind who is trying to break into Ontario’s egg-grading and distribution business.
The lawsuits against L.H. Gray and Son Ltd.
, Burnbrae Farms Ltd.
and the Egg Farmers of Ontario
marketing board originated several years ago, but have taken on a more sinister tone on the basis of information provided by Norman Bourdeau who took copies of thousands of e-mails and more than one million other electronic documents from L.H. Gray and Son Ltd. where he was head of information technology from 2006 to 2009.
Many of those same e-mails and some of the documents also appear in court files in London, Ont., that were sealed Feb. 22 at the request of lawyer Allison Webster, acting on behalf of Gray. She said the files contain sensitive commercial information.
The documents also indicate that Gray denies wrongdoing and accuse Bourdeau of trying to harm the company.
Justice J.C.Corkery appointed Darrel N. Hawreliak to be the supervising solicitor to protect the electronic files Bourdeau turned over. They are now in the hands of Kay Professional Corp.
Webster has asked the court to give them back to Gray, but lawyer Don Good, acting for Sweda Farms, told the judge he fears Gray would destroy the files.
Webster argues that the Bourdeau information is not related to the Sweda lawsuit against the egg board; Good counters that the Gray, Burnbrae and egg board actions are inter-connected.
Bourdeau says in the court documents that Gray did order him to delete the e-mails and Gray also says in the documents that it is normal company practice to destroy files once cheques have been cut to pay farmers.
The court in Oshawa will be asked on March 10 to combine the lawsuits Lind has filed against the egg board, Burnbrae and Gray. Each action seeks millions of dollars in damages.
One part of Sweda’s complaints is that when it could not get enough eggs to satisfy its customers and applied to the federal government for supplementary import permits, the egg board found Ontario-produced eggs to fill those orders and therefore result in denial of import permits.
But Sweda says the eggs furnished by Gray and Burnbrae were of inferior quality or not what was requested. There is e-mail evidence that Harry Pelissero of the egg board and Bill Gray of L.H. Gray and Son Ltd. arranged to include Mediums in a shipment that was supposed to be Grade A Small eggs.
For example, in e-mail exchanges in September 2009, between Pelissero and Scott Brookshaw of Gray, with carbon copies to Bill Gray, Pelissero writes “whether there are some Mediums in the lot they are being sold as Small.”
In another set of e-mails that September, Brookshaw writes “there would be some downgraded Mediums to make the order.”
On Sept. 17, Lind sent an e-mail outlining specifications for what he sought – 300 cases (of 15 dozen each) of Grade A small brown eggs with no downgrades from Medium, no upgrades from Cracks and Dirties and graded under Canadian Food Inspection Agency supervision.
Lind reminds them that upgrading Cracks and Dirties “is deemed an adulterated grading practice” and is a food safety issue.
Brookshaw, in an e-mail to Pelissero, writes that “the regulations allow downgrading” from Mediums to Smalls. He does not cite the regulation wording or number.
A Sept. 9 e-mail from Brookshaw to Burnbrae, carbon-copied to Bill Gray, says that the eggs from Gray’s plants are to go to Burnbrae so Sweda Farms will be misled about their origin. “Harry (Pelissero, general manager of the egg board) wants them to look like they came from Burnbrae so they have to be delivered together,” he wrote.
In another e-mail dated Sept. 24, Lind wrote Gray that the “eggs came on U.S. material that also asks the question are t these eggs U.S.?”
He goes on to write that “the use of material more than once to transport eggs is illegal.” and to tell Gray that he needs “documentation that these U.S. skids are approved to be imported to Canada.”
On May 4, 2009, Bill Gray e-mailed Pelissero to say that he heard that there has been an application for a supplementary import permit for organic eggs and writes “this is a dangerous play as now they can request a specialty product and receive and import. We must develop a plan and make formal submissions to the people in control.”
Earlier, on Oct. 10, 2008, Brookshaw e-mailed Bill Gray that Lind had applied for a supplementary import permit for organic and free-range eggs” and that Lind is lobbying politicians to grant producers the right to produce “3,000 units of specialty product per producer.”
In November, 2009, there are e-mails between Brookshaw and Ron Hasnoot about placing cracks in Grade A egg cartons. Brookshaw wrote “the more that can go into the pack the better. Good revenue.”
On Sept. 30, 2009, Bill Gray and Ted Hudson of Burnbrae exchanged e-mails about how they will handle supplying eggs to Shoppers Drug Mart.
“What will happen if Shoppers triggers Loblaws, etc. Major problems for supply in Eastern Canada. We have been talking about this for the last four weeks at least,” Gray wrote Hudson.
On Nov. 27, 2009, Gray e-mailed Aaron Kwinter to say “Joe H. (Hudson?) called last night requesting support for the following” and then has a list that includes increasing prices “1/2 cent on all eggs” and increased import quotas for breaker eggs.
Lind claims that one of his employees, John Klei, was lured away by Gray who therefore gained information about his clients and suppliers. There is an e-mail Dec. 15, 2009, from John Leitch, head of finance for L.H. Gray and Son Ltd., to staff members Joan Jewell and Sharon Morgan, instructing them to prepare a cheque for $5,000 for Klei.
Ted Hudson e-mailed Bill Gray on April 22, 2008, to say that he has been negotiating to buy out Lind, that he offered to “split the difference” at $2.47 million and that if Lind rejects that offer, he will revert to his original offer of $2.2 million.
He says that Lind’s business is not worth the price, but buying him out would avert the possibility that Nutri Oeuf of Quebec
might buy out Lind and then become a competitor for the Toronto market.
Burnbrae made another attempt a few years earlier to buy out Lind.
There are also documents in the court files outlining how Joe Hudson and Bill Gray decided to split the purchase of competitor Aaron Metzger Ltd. of Wallenstein. Hudson seemed to be concerned that if Burnbrae bought Metzger alone, some of the major supermarket-chain clients would object.
There are indications that Burnbrae also invited Gray to participate in purchasing Lind’s business.