A Vancouver Island businessman and his company have been awarded $12 million for helping out-of-province companies buy out 16 B.C. ranches in a $63-million deal.
The decision, handed down March 25 by B.C. Supreme Court Justice Emily Burke, centred on the sale of shares of the Blue Goose Cattle Company. The company holds more than 18,200 hectares spanning 21 locations across the interior of the province.
Blue Goose Capital sold its shares in the ranching company in 2021 to Monette Farms Ltd., its CEO, Darrel Monette, and the numbered company 102134752 Saskatchewan Ltd.
, an 81-year-old cattle rancher and logging company owner, claimed he introduced the buyer and seller, and later provided advisory services. Dutcyvich and his company 3L Developments Inc. also claimed $40,000 for services surrounding logging contracts, and $6,900 in “pocket expenses.”
Humble beginnings to broker of multimillion-dollar deals
Dutcyvich was born on a farm in Saskatchewan. After finishing Grade 8, he started working in a butcher shop and meat processor. At 16, he moved to Vancouver Island and started working as a logger, the ruling notes. Dutcyvich later went on to found Lemare Lake Logging, “a profitable logging company on Northern Vancouver Island, which at one time had 400 employees,” wrote the judge.
The businessman used profits from his logging company to buy 10,500 hectares of farmland in Saskatchewan, which he sold for $26 million in 2017.
In the spring of 2020, the Alberta-headquartered company LBJ Capital Inc. was the first to approach, and eventually convinced Dutcyvich to aid in the purchase of the Blue Goose shares, which were then being offered for $100 million.
Both parties agreed that if Dutcyvich could strike a deal below that offering price, he would be entitled to half the money saved, according to the court ruling.
“For example, as Mr. Dutcyvich explained, if he was able to reduce the purchase price by $20 million, Mr. Dutcyvich and 3L Developments would receive $10 million,” wrote Judge Burke.
Blue Goose Capital set up a “substantial data room” to securely house 620 files and more than 85 folders of digital documents linked to the shares and ranching interests. Dutcyvich and his company entered into a non-disclosure agreement with the sellers in 2020.
Ranches found to be overpriced
To understand the value of the B.C. ranches, Dutcyvich set to work checking the land and leases, and assessing whether the company had the 14,000 cattle it claimed. Tallies later pegged the number at 5,000 cows, the rest made up of steers and calves.
Two years and three helicopter trips later, Dutcyvich also raised concerns about large payrolls often made up of the ranch manager’s relatives, and equipment being moved around before he could count what was there, the ruling says. Some leased land wasn’t going to get renewed, he learned, because it was being returned to First Nations.
His recommendations to the buyers: pay no more than $76 million.
The Saskatchewan company signed a term sheet — essentially, a promise — to buy the shares for the recommended amount on June 11, 2020. Dutcyvich received an unsigned solicitor’s irrevocable direction to pay $12 million to 3L Developments as part of the transaction process once it was completed.
Turfed early buyers seek behind-the-scenes deal
By the fall of that year, LBJ was unable to source funds to complete the sale, prompting Blue Goose Capital to state they not longer wished to deal with the company.
Unbeknownst to Dutcyvich, the judge found there was evidence that Darrel Monette and Monette Farms — a large corporation with ranch and agricultural holdings in Saskatchewan and the United States — were making arrangements to get involved with LBJ.
Dutcyvich said Monette started appearing in conference calls with LBJ in late 2020. They first met in person in March 2021 after Blue Goose Capital said it no longer wanted to deal with LBJ.
“According to Mr. Dutcyvich, Mr. Monette said that he was ‘going to leave those three buggers and do the deal on his own’ and that he would like Mr. Dutcyvich’s help,” wrote Judge Burke in her ruling.
“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.”
A Scotiabank letter later confirmed to Dutcyvich and the CEO of 3L that Monette Farms had access to $395 million in credit.
On March, 8, 2021, Monnette Farms gained access to the data room, and within a week the company signed a term sheet to buy the shares in the B.C. ranches, including Lambery Creek Organic Meats, a processing facility in North Vancouver.
Meanwhile, LBJ quietly signed a term sheet to purchase 75 per cent of the shares in Monette Farms — despite Blue Goose Capital saying they didn’t want to have anything to do with the company they considered “dodgy.” As it moved to purchase the B.C. ranches, the Saskatchewan buyer was quietly bought out.
Dutcyvich and Monette met at the Kamloops Coast Hotel, and on May 6, 2021, took an early morning helicopter flight from Kamloops to tour the ranches, though other witnesses dispute the exact dates.
In a brief conversation, Dutcyvich said Monette confirmed he would pay the $12 million when the deal was closed.
Monette said the conversation never happened, and in court, he attempted to minimize the man’s role in the deal, wrote the judge.
That was the last time they would speak in person, according to submissions.
Monette intended to use deal with LBJ to pay out plaintiff, rules judge
At the end of August 2021, the owners of Blue Goose Capital — the Dundee Corporation (TSX:DC.A) — publicly announced the sale of the ranches to Monette Farms.
Judge Burke heard how in the lead-up to the sale, LBJ had quietly approached Monette.
By early 2021, it proposed a deal to take over a three-quarter stake in Monette Farms for $630 million. Monette signed the term sheet on March 10, 2021, around the same time Dutcyvich said he started appearing in conference calls.
In court, Monette testified that the price for the B.C. ranch lands had always been $76 million (they were ultimately sold for $63 million). He said Dutcyvich and 3L Developments — whose CEO had spent hundreds of hours appraising the ranching business — had done little valuable work to earn $12 million.
But Burke found Dutcyvich to be a more credible witness. She said oral contracts can be enforceable under the law so long as they are clear.
“In view of this tangled history, it is disingenuous of Mr. Monette to indicate this deal was his initiative and a deal of Monette Farms alone,” wrote Burke in her ruling.
The judge said Monette deliberately avoided disclosing LBJ’s continued role in the ranch land purchase. Monette did not care about the $12 million promise because LBJ's takeover ultimately meant it would pay, leaving Monette with $300 million from the sale of his own company, the plaintiffs argued.
“I accept the truth of this proposition,” wrote Burke.
She dismissed the defendants’ counterclaim and ruled the plaintiffs were entitled to an even $12 million.
