Sunterra says court erred in cheque kiting ruling as it seeks appeal of $35M decision

Several businesses operating under the Sunterra banner are seeking an appeal of a recent civil court ruling that awarded $35 million to a U.S. lender, which claimed the Alberta firm had engaged in cheque kiting.

In the late January ruling, Justice Michael Lema also found Sunterra’s president, Ray Price, personally responsible for the debt.

Sunterra runs farm operations and a chain of popular grocery stores, with retail locations in Calgary, Edmonton and Red Deer.

In their appeal, Sunterra Farms, Sunwold Farms, Sunterra Enterprises and Price argue that Lema “made errors of law, fact and mixed fact and law” in his ruling.

They argue Lema shifted the burden of proof unfairly onto them and ruled that cheque kiting occurred “without expert opinion evidence.”

“[Lema failed] to adequately consider deficiencies in the evidentiary record,” the notice of appeal reads.

In his January decision, Lema wrote that Sunterra’s Canadian and U.S. companies sent cheques back and forth across the border “at high volumes, in large amounts, for reasons unrelated to actual business activity, with the express aim of ‘covering’ account shortfalls by the ‘deposit’ of incoming cheques themselves not anchored on actual cash balances.”

In his ruling, Lema said Sunterra had argued that both its U.S. and Canadian lenders understood and accepted the cheque-based system, and that it was aimed at ensuring no overdrafts were experienced on either side of the border.

But Lema disagreed, writing that “the irresistible conclusion” was that Sunterra engaged in cheque kiting “on an astonishing scale,” writing that intercompany transfers in 2024 totalled almost $6.3 billion.

His decision stated that in February 2025, when the practice was discovered, both of Sunterra’s Canadian and U.S. lenders stopped payments on cheques being issued back and forth between various Canadian and American Sunterra entities.

“The net outcome, after the lenders applied all available credits, was that the American lender [Compeer Financial] experienced a net loss of approximately $35 million US, entirely attributable (in its view) to the kiting scheme,” the judge wrote. 

Lema wrote that on this side of the border, National Bank of Canada, Sunterra’s Canadian lender, ended up with no direct losses related to the alleged cheque kiting.

Compeer is also seeking to appeal specific parts of the January ruling.

In the ruling, Price was found personally liable for the debt. But Lema declined to hold two other Sunterra employees personally responsible, saying they were carrying out instructions.