Saskatchewan-based Monette Farms ordered to pay $12M to adviser over B.C. ranching deal

WATCH: A B.C. court has ruled that Saskatchewan-based Monette Farms must pay an adviser $12M in connection to a ranching deal.

A British Columbia court has ruled that Saskatchewan farming baron Darrel Monette must pay $12 million he promised to an adviser during a large-scale cattle ranching deal in 2021.

David Dutcyvich owns Vancouver Island-based 3L Developments Inc., which served as an intermediary in the $63 million purchase of 16 separate ranches in the B.C. interior from the Blue Goose Cattle Company (BGCattle).

According to the 50-page decision from the Supreme Court of British Columbia, the dispute centres on an exchange between Monette and Dutcyvich in early May of 2021.

Dutcyvich claimed that during a brief conversation prior to boarding a helicopter to tour some of the ranch land – the pair agreed that Dutcyvich would receive $12 million when the deal closed.

It’s a conversation Monette claims did not take place, while maintaining he made no agreement Dutcyvich in respect to the purchase of the shares in BGCattle.

However, Justice Emily Burke found that after combing through extensive evidence and testimony she was “satisfied” that both Monette and Dutcyvich entered an oral contract beginning in March of 2021.

“I am satisfied that the vital or fundamental terms of the contract were agreed to and sufficiently certain – essentially, that Mr. Dutcyvich would assist Mr. Monette in purchasing the shares of BGCattle in exchange for a fee of $12 million, so long as Mr. Monette demonstrated that Monette Farms had sufficient financial capability,” Burke explained.

“These promises operated as the consideration supporting the agreement.”

Monette Farms Ltd. – which is based in Swift Current, operates throughout Saskatchewan, Manitoba and the United States – with operations stretching as far south as Arizona.

Darrel Monette serves as the sole owner and shareholder of his business. As of the fall of 2020, Monette Farms employed up to 450 people and seeded over 55,000 acres.

In the court documents, Dutcyvich is described as an “81-year-old, self-made, successful businessman.”

Born in Saskatchewan, Dutcyvich eventually moved to Vancouver Island to work in logging – eventually establishing Lemare Lake Logging.

Proceeds from that business were used to acquire ranch and farmlands in Saskatchewan – with Dutcyvich’s holdings growing to more than 26,000 acres at one point.

He became a leader in cattle husbandry, utilizing genetics within his cattle herds. In 2017, Dutcyvich sold his ranching and farming interests for $26 million.

A complicated sale

The decision delves into the complicated inner workings of the multimillion-dollar deal.

In 2020, BGCattle began the process of selling its ranching operations in British Columbia. The shares in BGCattle were owned by Blue Goose Capital – which in turn is a subsidiary of the publicly traded Dundee Corp.

The holdings consisted of 16 separate ranches, totalling more than 18,200 acres and 14,000 cattle. Okotoks, Alta. based LBJ Capital Inc. began negotiating with the company – and decided to hire Dutcyvich and his company 3L Developments to review the deal.

The court documents state that Blue Goose was selling its operations for just over $101 million.

According to Burke’s judgement, Dutcyvich was hired to see if the asking price was fair and if he could reduce it. As part of the deal – Dutcyvich would be entitled to 50 per cent of any savings if the asking price was reduced to under $100 million.

Dutcyvich went about his duties. While 3L Developments reviewed the company’s financials – he inspected the ranches in person.

He found that the ranch’s claim of having 14,000 cows was more realistically 5,000 – and that the 14,000 figure was made up of cows, calves, steers and bulls.

Additionally, Dutcyvich became concerned that equipment was being moved between ranches during his inspections – complicating his attempts to assess the assets.

Lastly, Dutcyvich found that much of the operation would be unable to renew much of its leased land – as it was slated to be returned to First Nations in the area.

With these observations, Dutcyvich concluded that BGCattle’s interests were worth $76 million – entitling him to $12 million. It was agreed that Dutcyvich and 3L would receive the funds when the deal between LBJ and BG Capital closed.

However, LBJ Capital was unable to close the deal and by the fall of 2020 – Blue Goose was searching for a new buyer – deciding it wouldn’t deal with LBJ.

Monette begins dealings

“At this time, unknown to Mr. Dutcyvich and 3L Developments, it appears that the defendants, Darrel Monette and Monette Farms, were making arrangements to have some measure of involvement with LBJ,” Burke said in her decision.

“Mr. Monette disputes this. However, I find that the evidence supports this involvement, and I therefore conclude that it did occur and was underway at this pertinent time.”

According to Burke, Monette was involved in conference calls in late 2020 which included LBJ and Dutcyvich. Blue Goose went on to cut its dealings with LBJ in January of 2021.

Later, in March, Monette and Dutcyvich met for the first time in person. Dutcyvich testified that this was the first time Monette asked for help.

The conversation at the centre of the whole dispute appears to have occurred just prior to a helicopter tour of some the ranches in the first or second week of May 2021.

“As part of this conversation, Mr. Dutcyvich said to Mr. Monette: “You know the deal, my fee is $12 million … are you going to pay me?” Mr. Dutcyvich testified that Mr. Monette replied “yes,” he would pay the fee,” Burke wrote in her decision.

“When cross-examined on why he took no more steps to confirm the payment owed by Monette Farms, Mr. Dutcyvich said that he took Mr. Monette at his word when he said he would pay Mr. Dutcyvich for the work. He liked and trusted Mr. Monette, and so he didn’t feel the need to pursue him.”

‘In good faith’

Burke maintained that the evidence presented in court established that Dutcyvich and 3L Developments “acted in good faith” in terms of the relationship with Monette and his business.

The justice shared some harsh criticism of the farming baron’s conduct in the closing lines of her decision.

“The defendants’ [Monette’s] duplicity throughout sought to minimize and deny the work undertaken by the plaintiffs [Dutcyvich and 3L], and I do not accept those claims,” Burke wrote.

“As argued, Mr. Monette appears to be reluctant to pay for those who assist him on his path to accumulate his very significant wealth, and the Court will not assist him in those endeavours.”

In a March 31 news release, Darrel Monette vowed to appeal the ruling.

“Regarding the decision, we completely reject and disagree with the findings of the judge and will be appealing the decision to the BC Court of Appeal immediately,” the release read.

Justice Burke’s full decision can be read here.