Saskatoon-based Shercom Industries is seeking $10 million in damages for what it calls “a flagrant breach” of commitment by the provincial government.
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Shercom Industries is pursuing legal action that alleges the Saskatchewan government is at fault for the company’s reduction in operations amidst a dispute over tire recycling contracts in the province.
The Saskatoon-based tire processor filed a statement of claim with the Court of King’s Bench earlier this month, naming Tire Stewardship of Saskatchewan (TSS) and its executive director, Stevyn Arnt, as defendants. Also named was the Government of Saskatchewan, which is responsible for the Ministry of Environment.
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TSS is a non-profit corporation that operates the provincial program for scrap tire management and recycling.
In a legal document, Shercom claims TSS’s move to introduce regional processor contracts split the market and led to Shercom “substantially reducing its operations,” which has resulted in over 120 job losses since 2021.
“Shercom states that the foregoing represents a flagrant breach of the Government’s commitment” to supply market stability in 2017, according to the court filing.
The company further alleges that TSS published “false and defamatory” statements about Shercom’s operations and product quality, which caused profit losses, and that Arnt and TSS “intended to cause maximum harm to Shercom and put it out of business.”
“At all times, TSS has conducted itself in an arrogant, high-handed and shocking fashion, callously indifferent to the economic harm it has caused Shercom,” reads the claim.
Shercom has asked for punitive damages of $10 million from the provincial government for breach of contract, and further compensation from TSS or Arnt for “injurious falsehoods.”
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According to a summary of relevant information in the court document, the contract breach claim stems from a promise Shercom says was made with the province more than five years ago.
A fire at the processor’s Saskatoon facility in 2016 prompted Shercom to reach out to the Ministry of Environment seeking guidance to determine whether to invest $10 million into rebuilding. The company alleges it met in 2017 with then-environment minister Scott Moe, who “assured” Shercom president Shane Olson that he would deliver a long-term contract, stable supply and a “voice in the future of the industry” to justify such an investment.
Approval of Saskatchewan’s tire stewardship program in 2018 included a provision that tires must be processed inside the province. Shercom took that to be a fulfilment of the supply assurance and proceeded with its rebuild.
Four years later, Shercom says it has now been pushed out after TSS signed an agreement with California-based Crumb Rubber Manufacturers (CRM) as a second processor in 2022, leading Shercom to close its facility in 2023. CRM then won a bid over Shercom to take over the northern processing contract in early 2024.
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“Glaringly, Saskatchewan now only has one (out-of-province) processor with a token facility in Moose Jaw,” reads the court document.
Saskatchewan NDP leader Carla Beck raised the question of Moe’s culpability in Shercom’s claims back in May, which the premier called a “smear campaign” from the Opposition.
Aleana Young, critic for jobs and economy, pointed out Monday that legal action from a large employer in the province now “names the sitting premier as being intimately involved.”
“It tells us that this is a government that isn’t willing to come clean with Saskatchewan people about how prominently involved the premier himself has been in this scandal,” she said.
Young added that the claims of in-province job losses should be a significant concern for Moe as “the government should be putting Saskatchewan businesses and workers first, not fighting them in court.”
Responding Monday, Moe said that the government’s role in tire recycling is “to set up a regulatory environment” and that it’s for TSS’s board to make the decisions on how tires are processed.
“The program is one that was asked for by municipalities a number of years ago to ensure that we don’t have tires going into our municipal landfills,” he said. “There’s still tires that are to be recycled by either Shercom or somebody in this space, and so the job opportunities here, I think, would remain.”
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The Ministry of Justice said the court claim had been received by the province last Monday but it declined to provide any further comment “as this matter is currently before the courts.”
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