The federal government has lost yet another legal battle against a class-action lawsuit that accuses it of gross negligence in the mad cow crisis.

The statement of claim asserts, among other things, that Ottawa introduced a regulation in 1990 that specifically allowed the feeding of cattle parts to other cattle - the method through which bovine spongiform encephalopathy, or mad cow disease, is transmitted.

It was only in 1997 that Canada banned the feeding of cattle to other cattle.

On Friday, the Ontario Court of Appeal refused to strike down two negligence claims brought against Ottawa by lead plaintiff Bill Sauer, a cattle producer near Niagara Falls, Ont.

The court upheld a lower court decision which found that more evidence was necessary before such a move could be justified.

The decision also dismissed Winnipeg-based cattle-feed company Ridley Canada’s attempt to have an allegation against it stricken from the suit, as well as an appeal from Sauer in which he attempted to have yet another allegation against Ridley reinstated.

The suit, launched in April 2005, represents cattle farmers from several provinces.

In May 2003, the discovery of an infected cow in Alberta prompted the United States to close its borders to Canadian cattle and precipitated the crisis.

It was estimated at the time that the industry suffered losses of some $7 billion.