Meadow Creek Forest Products is facing lawsuits and liens from its former logging contractor and a woodlot owner.
A notice of claim filed in BC Supreme Court in Kamloops on October 30 by Alkam Holdings Ltd. names Meadow Creek Forest Products, Meadow Creek Cedar, and Sinclair Forest Management Ltd. of Clearwater.
Alkam says it is owed $237,000. It has also filed a lien against wood that has been felled but not yet moved off a woodlot owned by Sinclair. Alkam is further seeking an order prohibiting processing of the wood.
Last week, Inder Johal, a Meadow Creek Forest Products executive, indicated that Alkam was “fired due to log quality issues and issues with [their] attitude towards our forestry department.” This week he added: “We are working with our lawyers to handle this issue” and pledged more details “as soon as this headache gets resolved.”
In its claim Alkam said it was hired in June to build and maintain roads, and harvest and haul timber from the Lendrum Creek area to Meadow Creek’s sawmill. It says it cut and delivered the wood without any quality concerns being raised.
Afterward, under an oral agreement, Alkam says it built roads on Sinclair’s woodlot, graded and brushed trees, and harvested over 5,200 cubic meters of wood — 130 truckloads worth.
After 26 loads were delivered to the mill, Meadow Creek Forest Products indicated the timber didn’t satisfy its specifications, and according to Alkam’s claim, “purported to retroactively impose new, more stringent log quality specifications” and impose penalties for non-compliance.
Alkam further alleges Meadow Creek complained “without justification, about two mixed species loads” and indicated it wouldn’t accept any more timber from the woodlot. Alkam denies the timber failed to satisfy specifications, but says as a result of Meadow Creek’s order, combined with a “chronic failure” to pay on time, it refused to perform any further work on the woodlot. About 4,000 cubic meters remains felled, skidded, and decked, but not loaded.
Alkam says it is also owed money for clearing a right-of-way and renting a top loader to Meadow Creek. Between August 18 and October 7, it invoiced for $613,000 but says it was only paid $360,000. The remaining timber on the woodlot, which Alkam has claimed a contractor’s lien against, has an estimated value of $15,700. Another lien has been filed against wood at the mill.
Meadow Creek Cedar, which sold its timber license and mill to San Group this year, is named in Alkam’s suit because the license has not yet been legally transferred. San Group renamed the Meadow Creek Cedar operation Meadow Creek Forest Products, but the former still exists as a separate legal entity.
Sinclair Forest Management, meanwhile, filed suit October 14 for breach of contract, claiming Meadow Creek Forest Products failed to pay for the delivered logs off its woodlot after agreeing in July to buy 6,000 cubic meters’ worth.
Sinclair is seeking payment for that timber plus the value of what remains at the woodlot, although a specific dollar amount is not indicated. (Alkam’s suit seeks a declaration that its claim has a higher priority than Sinclair’s.)
None of the allegations have been proven in court. The defendants have three weeks to file responses.
Kooner among Meadow Creek Forest Products directors
The man under whom Meadow Creek Cedar’s forest license was suspended and nearly cancelled is still involved with Meadow Creek Forest Products.
Dale Kooner was a director of the latter company as of August 8, according to a corporate registry filing. The only other director listed was Kamal Sanghera, one of the principals of San Group, the company that reached a deal to buy the license and mill earlier this year.
Meanwhile, a company summary dated October 3 showed the lone director of Meadow Creek Cedar is Justin Singh. Meadow Creek Forest Products and Meadow Creek Cedar both have registered offices at 212-5455 152nd Street in Surrey.
Inder Johal of Meadow Creek Forest Products denied rumors Kooner holds a 25 per cent interest in the new company, but said Kooner is a director “due to the liability clean up issue with the license.”
Kooner, a Surrey resident who was also involved with a blueberry farm and several trucking firms that ran afoul of regulators, acquired Meadow Creek Cedar from a Japanese concern in 2005. The company’s license was suspended in early 2012 for poor forest practices and a notice of cancellation was subsequently issued.
However, San Group bought the license and idled mill this year and paid off $150,000 in fines and other liabilities. As a result, the license suspension was lifted, although the Ministry of Forests says the final legal transfer has not occurred.
District forest manager Garth Wiggill said Thursday the license is back in limbo as Meadow Creek Cedar has been “suspended as a client” by the BC government’s revenue branch, which means no new cutting permits can be issued. The only active permit on the license is for an area that is inaccessible due to a closed bridge.
“The license itself is not suspended, but it means the same thing,” Wiggill said. “The main reason is that we are still awaiting final notification of the transfer.”
Wiggill said while San Group paid off old debts, others have built up again relating to stumpage, although he declined to say how much is owed. While San Group is managing the license, “in my view they don’t fully own it. That is what I am waiting for.”
Wiggill is optimistic the debts will be paid off. San Group told him the transfer has been delayed by legal implications related to past ownership, but they “fully intend to resolve it.”
Although Wiggill doesn’t manage or control what happens at the mill, he said his understanding is that it is has been buying logs from private woodlots and other clients.