THE TORONTO-DOMINION BANK PLAINTIFF Execution Creditor - v. -, 2003 SKQB 160

2003 SKQB 160 Q.B. A.D. 2002 No. 604 J.C. R. IN THE QUEEN’S BENCH JUDICIAL CENTRE OF REGINA BETWEEN: THE TORONTO-DOMINION BANK PLAINTIFF Execution Creditor - and - TED GREGORY YASHCHESHEN AND FUTURE FOOD CORP. DEFENDANTS -and- BANK OF NOVA SCOTIA CLAIMANT -and- BRAD HARRIS AND DEVIN HARRIS CLAIMANT -and- STAN URBANOSKI, SHERIFF, JUDICIAL CENTRE OF YORKTON, IN THE PROVINCE OF SASKATCHEWAN APPLICANT Mark F. Mulatz for the Toronto-Dominion Bank

Daniel Tapp for Ted Gregory Yashcheshen and Future Food Corp. Gary Meschishnick for Bank of Nova Scotia Russell Peet for Devin and Brad Harris No one appearing for Sheriff, Judicial District of Yorkton FIAT March 31, 2003 PRITCHARD, J. [ 1 ] On April 12, 2002 the Toronto-Dominion Bank (“TD Bank”) obtained default judgment against Ted Gregory Yashcheshen (“Yashcheshen”) and Future Food Corp. (“Future Food”) for $51,423.61 plus taxed costs. On the same date, TD Bank obtained a writ of execution against the goods and lands of the debtors in the amount of $52,005.24.

TD Bank then instructed the Sheriff of the Judicial Centre of Yorkton to seize property of the debtors to satisfy the writ of execution. The Sheriff contacted the debtors and on June 24, 2002, Yashcheshen advised the Sheriff that he would prefer to have his crops seized to satisfy the judgment rather than his shares in Future Food. The Sheriff acceded to the request and on September 3, 2002 the Sheriff met with Yashcheshen and seized all of the standing crop on E ½ 3-30-4W2, E ½ 11-30-4W2 and W ½ 13-30-4W2.

At the time of seizure, Yashcheshen advised the Sheriff that the crops on the said lands were the property of Future Food. As confirmation, Yashcheshen provided the Sheriff with a Saskatchewan Crop Insurance statement of insurance in the name of Future Food covering all of the seized crops. [ 2 ] On October 15, 2002 Yashcheshen contacted the Sheriff to advise that the crop seized on October 14, 2002 was being harvested by a third party. Yashcheshen also telephoned the RCMP to report that individuals were unlawfully removing the seized crop. The RCMP attended and stopped the combining.

The crop that had already been combined and delivered to the elevator was traced and proceeds thereof in the amount of $7,204.04 were ultimately received by the Sheriff on January 23, 2003. [ 3 ] Between November 12 and 18, 2002 the Sheriff arranged for the harvesting and sale of the remaining seized crop. After payment of the costs of combining, the Sheriff realized and deposited in the Sheriff’s trust account the sum of $26,929.25.On January 6, 2003 the Sheriff received additional proceeds of $5,800.96 from Saskatchewan Crop Insurance which funds were also deposited in the Sheriff’s trust account.

In total, the Sheriff received net proceeds from the seized crops of $39,934.25. [ 4 ] The Sheriff would have forwarded these funds to TD Bank in partial satisfaction of its writ of execution, however, he was notified of a dispute over ownership of the seized crop and proceeds. As a result, the Sheriff initiated the within interpleader action for the court’s assistance in determining the proper party entitled to the funds held in his trust account. [ 5 ] Devin Harris and Brad Harris claim that the seized crop and proceeds thereof are their property.

Bank of Nova Scotia supports this claim and further claims a security interest in the crop and proceeds to the extent of outstanding costs of inputs pursuant to the terms and conditions of a Credit Application executed by of Devin Harris on April 30, 2002. [ 6 ] Walter Fraske is the registered owner of the lands upon which the seized crops were grown. Yashcheshen says that Future Food is the lessee of the lands. In his affidavit sworn February 6, 2002, Yashcheshen deposes: 3.

Attached hereto and marked Exhibit “B” to this my affidavit is a copy of the cash lease granted by Walter Fraske to Future Food Corp. dated March 30, 2001 for the following lands: NW 13-30-4W2nd meridian SW 13-30-4W2nd meridian NE 11-30-4W2nd meridian NE 3-30-4W2nd meridian

SE 3-30-4W2nd meridian (the lands”) 4. The term of the above lease is three (3) years, and it is in good standing. . . [ 7 ] Devin and Brad Harris also claim that they are the lessees of the lands. Their claim is supported by the registered owner of the lands. In an affidavit sworn February 23, 2003, Walter Fraske deposes: 3.

That I have reviewed the purported Agricultural Lease bearing the date 30 March 2001 attached hereto and marked as Exhibit “A” to this my Affidavit and I state unequivocally that the signature thereon at Page 9 represented as my signature is not my signature and I have never signed any Lease of any of my farm land to Ted Yashcheshen and/or Future Foods Corp. at any time. 4.

That in my lifetime I have only spoken to or met Ted Yashcheshen on one occasion at which time he presented to me a 3-year term Lease which I refused to sign agreeing only to the land being rented for a one-year term (the year 2001), which I told him could be renewed on a year to year basis thereafter at my discretion. 5. That in the calendar year 2002 I leased the said farm lands exclusively to Brad K. Harris and his son Devin J. Harris. 6.

That attached hereto and marked as Exhibit “B” to this my Affidavit is a true copy of the Agricultural Lease, bearing my signature, which I signed on 23 October 2002 at the request of Brad K. Harris documenting and confirming the lease terms which I and the Lessees had agreed upon prior to the said farm lands being seeded in the spring of 2002. 7. That I have received from the Lessees the cash rental of $14,000.00 provided for in the said Agricultural Lease. [ 8 ] On February 28, 2003 Yashcheshen filed a supplementary affidavit sworn February 28, 2002 [sic] in which he deposes: 4.

In April, 2001, I met with Walter Fraske at Smitty’s Restaurant in Yorkon. Mr. Fraske and Future Food Corp. agreed on the terms of a three (3) year cash lease for farm lands. I had prepared a form of lease and provided a copy to Mr. Fraske in April, 2001. Walter Fraske did not execute the written lease on that day as he was leaving for Texas. Since we had agreed on the terms of the lease, I subsequently inserted his name on the document. . . . [ 9 ] Yashcheshen argues that he has a valid oral lease of the lands and that in equity this court has the power to enforce the oral agreement.

He acknowledges that the signed lease attached as Exhibit “B” to his affidavit sworn February 6, 2002 was not actually signed by the landlord but says that he has relied on the landlord’s oral representations and paid all lease rentals in accordance with his understanding of the oral agreement.

He therefore argues that since there has been partial performance of the oral lease, it can be enforced by the court notwithstanding the general rule under the Statute of Frauds that an enforceable agreement relating to land must be in writing. [ 10 ] It is obvious that there are a number of outstanding legal issues between Yashcheshen, Future Food and Brad Harris. Yashcheshen clearly believes that these disputes are relevant to establishing equitable if not legal ownership of the crop in question.

How these matters will be ultimately determined is unknown and I make no finding on any of the issues between those parties other than a determination of immediate entitlement to the funds currently held by the Sheriff. [ 11 ] Yashcheshen is the president of Future Foods. I find that with respect to these proceedings, Yashcheshen and Future Food have attempted to mislead the court by producing in evidence a lease document purported to be signed by the registered owner of the lands when at all times they knew that the document had not been signed by Mr. Fraske.

Yashcheshen only acknowledged that he signed the registered owner’s name to the document when other evidence forced him to do so. Nevertheless, Future Food now asks this court for equitable relief. [ 12 ] For the purposes of this interpleader application I am not satisfied, on a balance of probabilities, that Future Food was the lessee of the lands at the time the seized crops were grown. As between landowner and lessee, I find Brad Harris and Devin Harris to be the lessees of the lands and prima facie entitled to the crops produced thereon.

Nevertheless, and notwithstanding this finding, there should be no doubt as to how the court reacts to Yashcheshen’s affidavit of February 6, 2002. I find that Yashcheshen and Future Food have not come to this court with clean hands and in the circumstances, I find it difficult to imagine any additional facts that would have

moved me to grant them the requested equitable relief. [ 13 ] There will therefore be an order directing the Sheriff to pay the proceeds of the seized crops, other than the crop insurance proceeds of $5,800.96, to the claimants Brad Harris and Devin Harris. The Harris’ do not dispute the security interest in the proceeds claimed by Bank of Nova Scotia and they shall be responsible, as in the ordinary course, to their secured creditor.

There will be a further order that no action shall be brought against the Sheriff for the seizure of the crops or subsequent action with respect thereto or for anything done under this order. [ 14 ] There is insufficient evidence at this time to determine entitlement, if any, to the crop insurance proceeds. The Sheriff is therefore directed to retain the funds until further order of this court. The Sheriff shall place the funds in an interest bearing account with interest to accrue to the benefit of the party ultimately entitled to the funds or as this court may otherwise direct.

Any party to these proceedings may make further application for payment out of these funds but only upon notice to Saskatchewan Crop Insurance and after having provided Saskatchewan Crop Insurance with a copy of this fiat. [ 15 ] Costs of the within proceeding including the Sheriff’s costs of seizure shall be paid by Yashcheshen and Future Food. PRITCHARD, J.