Robert Matrenga - v. -, 2018 SKPC 31

IN THE PROVINCIAL COURT OF SASKATCHEWAN CIVIL DIVISION Citation: 2018 SKPC 031 Date: April 19, 2018 File: 154/16 Location: Melville _____________________________________________________________________________ Between: Robert Matrenga - and - Input Capital Corp. Adam Crocker For the Plaintiff Graham Quick For the Defendant ______________________________________________________________________________ JUDGMENT R. GREEN, J ______________________________________________________________________________ I. INTRODUCTION [ 1 ] Robert Matrenga (the plaintiff) is a Melville area farmer and businessman.

Input Capital Corp. (the defendant) is a financing company which, amongst its pursuits, purchases canola from farmers across Saskatchewan, including the Melville area. In a so-called canola streaming contract, the defendant purchases the rights to a farmer’s canola crop, pays the farmer in advance for the canola, and then takes possession and sells the crop after harvest. One such Melville area farmer who entered into a canola streaming contract with the defendant was Morris Feduk, who, over the period relevant to this action, operated his farm through his corporation 101031585

Saskatchewan Ltd. [ 2 ] The plaintiff states in his claim that he loaned three pieces of his farming equipment to Mr. Feduk in the autumn of 2015: (1) a Unverferth Brent 772 Grain Cart; (2) an old grain dryer; and (3) a 2,000 liter propane tank. He says he loaned this equipment to Mr. Feduk as a friend, and without any payment or consideration flowing between them. He denies that this was in any way a commercial transaction. In legal terms, he is claiming this was a gratuitous bailment of his equipment to his friend Mr. Feduk. [ 3 ] Unfortunately, Mr.

Feduk’s farm went into receivership, and the defendant, as one of his Mr. Feduk’s secured creditors, seized the grain cart and dryer and prepared to sell these by auction. The plaintiff says that on April 20 th , 2016, before the auction, his lawyer advised the defendant, through the receiver appointed to take control of Mr. Feduk’s farm equipment, that the plaintiff owned these items and that he had loaned them on a non-commercial basis to Mr. Feduk.

The plaintiff, further, says that, despite this notice, the defendant proceeded to sell the grain cart and dryer through Grasswoods Auctions of Saskatoon, for a sales price of $20,600.00 for the grain cart and $210.00 for the dryer (as set out in Exhibit P-2). As the plaintiff received no compensation for his equipment from the defendant, he sues in the tort of conversion for the value of this equipment. [ 4 ] The defendant, however, defends this action by saying that it was Mr.

Feduk, through his corporation, and not the plaintiff, who owned this equipment when representatives of the defendant seized the grain cart and dryer. In its Dispute Note, the defendant denied seizing the propane tank. In total, the defendant asserts that the defendant is not liable to the plaintiff in the tort of conversion, as the plaintiff did own any of the equipment, but, rather, had transferred ownership of it to Mr.

Feduk, through his corporation. [ 5 ] The tort of conversion requires: (1) a wrongful act; (ii) involving a chattel; (iii) consisting of handling, disposing or destruction of the chattel; (iv) with the intention or effect of denying or negating the title of another person to such a chattel. [1] A bailment is the giving of custody of property by a person (the bailor) to another person (the bailee) upon the obligations of the bailee: (1) to return the property to the bailor when requested; and (2) to care for the property while in his or her custody.

A gratuitous bailment is one without payment or promise of payment between the parties to secure these obligations. [2] [ 6 ] Ultimately, the issue is whether these three pieces of equipment were loaned non-commercially as a gratuitous bailment by the plaintiff to Mr. Feduk, or whether, as asserted by the defendant, ownership of the equipment was transferred by the plaintiff to Mr. Feduk, or to his corporation, before the defendant dealt with the equipment.

Both counsel acknowledged in argument that whether or not this was proved to be a gratuitous bailment of equipment would be determinative of the plaintiff’s claim in conversion respecting the grain cart and dryer. Regarding the propane tank, the issue is whether the evidence establishes that the defendant seized and sold the 2,000 liter propane tank as claimed by the plaintiff. [ 7 ] The plaintiff testified and, as well, called Mr. Feduk and Bill Carter (of Modern Propane in Fort Qu’Appelle) as witnesses. The defendant called employee Darryl Collie and Kelly Minisofer (from Grasswood Auctions) as witnesses.

I will set out the undisputed evidence in this case, and then analyze, separately, whether the plaintiff has been proved his claim regarding each piece of equipment. II. BACKGROUND [ 8 ] The plaintiff’s farm is east of Melville. He has known Mr. Feduk for decades and said he has lent farming equipment to his friend over the years. He, as well, said the last equipment he lent to Mr.

Feduk was a grain cart, a grain dryer and a propane tank. [ 9 ] After the plaintiff discovered that his equipment had been seized by the defendant, he instructed his lawyer, Grant Schmidt, to send a letter by fax to the receiver in charge of the property at Mr. Feduk’s farm, who was Ian Schofield from the firm of Myers, Norris and Penney. That letter was sent by Mr. Schmidt on April 22, 2016 and was titled re: Input Capital, Morris Feduk and Robert Matrenga.

This letter said the following: We are following up on our call of April 21, 2016 whereby we advised our client, Robert Matrenga, owns a Unverferth Brent 772 grain

cart which he lent to Morris Feduk. Our client noticed the creditor is auctioning the chattel through Grasswoods Auction (lot 47) and now has the grain cart in its possession on the sales lot. Our client purchased the grain cart from Hodgson’s Auctions on August 8, 2013. We enclose a copy of the invoice as proof of title and ownership. Please confirm that our client may pick up his property from your sales lot. In addition, our client has lent a 2,000 liter propane tank and old grain dryer to Morris Feduk. Our client has not been able to locate these items. From a distance he can see an old grain dryer on a hill.

It appears that your agents have not taken it to be sold. Please confirm our client may pick up his old grain dryer. (Exhibit P-3) [ 10 ] The plaintiff acknowledged that he had been involved in a legal dispute with the defendant some years back. I do not find that previous dealing between the parties to be relevant to this action, as I did not detect any sense of animus on the part of the plaintiff against the defendant, over a dispute that was eventually settled to the satisfaction of both parties at a pre-trial conference. [ 11 ] Mr.

Feduk said he has known the plaintiff for 45 years, that he has borrowed equipment from the plaintiff continuously. He said the last equipment he borrowed from the plaintiff was a header, a grain cart, a grain dryer and a propane tank. [ 12 ] The defendant was a secured creditor of Mr. Feduk’s. Mr. Feduk defaulted on his loan from the defendant, and, the defendant took possession of the equipment at Mr. Feduk’s farm in November, 2014. Mr. Feduk said he had joint control with the appointed receiver until April 2015, and, thereafter had no control over the equipment, even if it remained on his yard site.

The defendant started selling equipment from Mr. Feduk’s farm at the end of April, 2016. [ 13 ] Darryl Collie has been the Director of Special Projects for the defendant since January of 2016. Before that, he was employed by Palliser Farmland Management. Mr. Collie said he was involved with the receivership of Mr. Feduk’s farm initially through his employment with Palliser Farmland Management, and then for a short while after he came to be employed by the defendant.

He said there were thousands of items on the Feduk farm, and, as well, said that Ian Schofield, from the firm Meyers Norris Penny, was the trustee in charge of the receivership of Mr. Feduk’s farm equipment. [ 14 ] Kelly Minisofer is the President of Grasswood Auctions in Saskatoon. He was personally involved, as was his company, with the auction of equipment from Mr. Feduk’s farm. As a result, Mr. Minisofer spent a considerable amount of time at the Feduk farm in 2015 and 2016. He said he spent an extended period of time there cataloguing, preparing and displaying the items to the public.

He worked under the trustee from Myers Norris Penney, Ian Schofield. He said the equipment seized from Mr. Feduk’s farm was sold by two auctions, one at the end of April, 2016 and one in mid-June, 2016. He identified on Exhibit P-2 the Brandt single axle grain cart in question in this action, which was sold for $20,600.00, and the Grain Chief grain dryer, which was sold for $210.00. III. THE GRAIN CART [ 15 ] The plaintiff purchased this grain cart in August 2013 from Hodgin’s Auctions for $12,799.50 (Exhibit P-1).

He said he was buying machinery at an auction and saw that this grain cart was being sold for half price, which is why he purchased it. He said after he purchased it, he had no need for it at that point, which is why he loaned it to Mr. Feduk, who was in need of it. The plaintiff denied being paid anything, at any time, by the defendant for the equipment he loaned to Mr. Feduk. [ 16 ] The plaintiff said that he visited Mr. Feduk’s farm about once a month, and that during a visit in 2016, he saw his equipment in the yard and learned that it had been seized by the defendant, as a result of Mr.

Feduk’s bankruptcy. [ 17 ] The plaintiff maintained that he had claimed capital cost allowance for this grain cart, as he owned it, and further maintained that he at no time transferred ownership of this cart to Mr. Feduk, or to Mr. Feduk’s farming corporation. The plaintiff said Mr. Feduk has never paid him for any equipment lent to Mr. Feduk, as it was strictly done on the basis of lending equipment to a friend.

[ 18 ] In cross-examination, the plaintiff admitted that he had no records of loaning the grain cart to Mr. Feduk, and further admitted that he did not have with him at the trial any records showing that he claimed capital cost allowance for the grain cart or that he insured it (as he as well claimed). He said he loaned the grain cart to Mr. Feduk, and that, had he needed it back from Mr. Feduk, he would have taken it back. [ 19 ] Mr. Feduk was quite clear in his evidence that he borrowed the grain cart from the plaintiff at the start of harvest in 2013 and returned it to him after harvest that year.

He said that in 2014 he, again, borrowed the grain cart from the plaintiff. He denied that he paid anything to the plaintiff when he borrowed the grain cart. He said that this grain cart that was subsequently seized by the defendant, and sold by Grasswood Auctions. Mr. Feduk said he and the plaintiff, in his words, borrowed equipment back and forth. He said there was no specific discussion about this. [ 20 ] Mr. Feduk maintained that, because he possessed the grain cart loaned to him by the plaintiff, he was under the obligation to insure it and claimed to have done so.

He, again, however denied claiming capital costs allowance on his property as it was not his, but rather belonged to the plaintiff. [ 21 ] Mr. Feduk was asked in cross-examination about a

Schedule of Capital Assets dated December 14, 2015 which purported to be from Mr. Feduk’s farm corporation (Exhibit P-4). While Mr. Feduk said he had no personal knowledge of this schedule, which appeared to have been prepared by his accountant, he admitted it referred to his farm corporation at the top of the document. He acknowledged that at page 8 of that document there was a listing for a grain cart from Robert Matrenga, which was valued at $16,000.00.

He, however, denied that this value was for the purpose of claiming capital cost allowance or that he ever claimed that allowance (depreciation) on this grain cart. He said the only notation he had ever made about this grain cart was for the purposes of insuring this cart, as he had possession of it. [ 22 ] Mr. Feduk said he gave the combine header he had borrowed, back to the plaintiff in the fall of 2015. He said, after the other equipment had been seized by the defendant, he told a representative of the defendant (their solicitor) that some of the equipment belonged to the plaintiff.

He as well said that he told Darryl Collie, who was employed by the defendant, that some of the pieces of the equipment seized belonged to the plaintiff, but he did not list them for Mr. Collie. [ 23 ] Mr. Feduk, as well, admitted that he never told the plaintiff that his items had been seized in receivership. He essentially said that the plaintiff never came to pick up the items. [ 24 ] Mr. Collie said that, during his dealings at the Feduk farm, that Mr. Feduk told him that a number of the pieces of equipment on his property were not owned by him. He said he told Mr.

Feduk to have the owners contact him, and, while some did, he heard nothing from the plaintiff, nor did Mr. Feduk ever specifically mention the plaintiff to Mr. Collie. While he acknowledged that Mr. Feduk told him that other farmers owned the property on his land, Mr. Collie denied ever seeing the letter from Mr. Schmidt to Ian Schofield, despite that letter listing the defendant as a party to a potential dispute over the equipment. [ 25 ] In determining whether the tort of conversion has been proved respecting the grain cart, I accept Mr.

Feduk’s evidence that he borrowed this grain cart before harvest in 2013 and returned it after that harvest, and, further, that he borrowed it again before harvest in 2014. I, as well, accept Mr. Feduk’s evidence that the defendant seized and took possession of the farm equipment on his farm in November of 2014, albeit the equipment physically remained on his farm for a substantial period, until it was taken away for the auction which began in April, 2016. [ 26 ] While I do not accept that the plaintiff accurately recalls when it was that Mr.

Feduk first borrowed this grain cart, I accept the evidence of both men - even though they did not produce any written evidence of it or any written evidence of the plaintiff claiming depreciation on the cart or Mr. Feduk insuring it - that Mr. Feduk borrowed this grain cart from the plaintiff. I as well accept, despite Mr. Feduk’s evidence that they often exchanged equipment back and forth and the implication that this was occasionally a reciprocal arrangement, that there was no payment or promise of payment made by Mr. Feduk to the plaintiff regarding this grain cart when Mr. Feduk borrowed it.

While the appearance of this grain cart on a

schedule of property from Mr. Feduk’s farm corporation in December of 2015 does raise some suspicions, I, nevertheless, note that this

schedule was one that Mr. Feduk said he had no role in preparing or personal knowledge of, and that Mr. Feduk claimed the only value he would have attached to the grain cart was for the purposes of insurance of the cart, which was in his possession. At the end of the day, I do not reject Mr. Feduk’s evidence on this, and as a result this entry on the

schedule does not cause me to reject the evidence of either the plaintiff or Mr. Feduk on how Mr. Feduk came into possession of the grain cart.

[ 27 ] Taken together, I am satisfied on all the evidence presented that this was a gratuitous bailment of the grain cart by the plaintiff (as bailor) to Mr. Feduk (as bailee). [ 28 ] Further, in my view the plaintiff made a reasonable attempt to advise the defendant of his ownership of the grain cart once he learned from Mr. Feduk that the defendant had seized this, through his lawyer’s letter of April 20, 2016 to the trustee in charge of the receivership proceeding against Mr. Feduk and his corporation. Whether or not Mr.

Collie became aware of the contents of this letter or the plaintiff’s claim as owner of the grain cart, this letter clearly asserts the plaintiff’s claim and lists the defendant as a party against whom he potentially may have a claim regarding the cart. In my view, this letter constitutes notice to the defendant of the plaintiff’s claim of ownership, notice that must be taken in the context of Mr. Feduk’s advice to the defendant’s employee Mr.

Collie that he was not the owner of all the farm machinery found on his farm. [ 29 ] In conclusion regarding the grain cart, I am satisfied on a balance of probabilities that the defendant seized and then disposed of this grain cart with the effect of denying the title of the plaintiff to this chattel, and that this wrongful act constituted the tort of conversion. As a result, the plaintiff will have judgment against the defendant for the value of this grain cart, which I am satisfied was the amount it was sold for at the auction ($20,600.00). IV.

THE GRAIN DRYER [ 30 ] The plaintiff said the grain dryer was in his yard and he was not using it as it was just sitting there. He said Mr. Feduk needed it and he was prepared to lend it to him, together with the propane tank. The plaintiff identified the grain dryer from a list from Grasswood Auctions (Exhibit P-2) as the one that he had lent to Mr. Feduk. Despite claiming that he had paid $2,000.00 for it, the plaintiff acknowledged that this dryer had been sold at auction for $210.00. [ 31 ] Mr.

Quick, for the defendant, candidly admitted that the defendant did not oppose the plaintiff’s claim in conversion for the dryer. Despite the plaintiff’s view of the dryer’s value, I view the auction price as the most accurate measure of the value of this piece of equipment. As a result, the plaintiff will have judgment for the value of the grain dryer in the amount of $210.00. V. THE PROPANE TANK [ 32 ] The plaintiff testified that, in addition to the grain dryer, he loaned Mr. Feduk a 1,750 gallon propane tank, which was on a trailer when it was picked up by Mr.

Feduk in 2013 or 2014. [ 33 ] Bill Carter is the co-owner of Modern Propane in Fort Qu’Appelle. Mr. Carter said that he had an account for propane with Palliser Farmland Management, which had fallen into arrears. He said he contacted a representative of that company, and asked if they might have any propane tanks for sale in part payment of the account. He said an employee of Palliser Farmland Management told him there was a propane tank at Mr. Feduk’s farm for sale. As a result, Mr. Carter arranged to have two propane tanks picked up from Mr. Feduk’s farm.

The value of these tanks, which he said were each 1,000 gallon tanks and located on blocks at Mr. Feduk’s farm, were credited to the account of Palliser Farmland Management. [ 34 ] Setting aside the reality that there was no evidence of any direct connection between this propane tank sale and the defendant - other than that Mr. Collie was a former employee of Palliser Farmland Management - I am not satisfied on a balance of probabilities that one of the two propane tanks sold were the property of the plaintiff. That is because Mr.

Carter said each tank was 1,000 gallons, in contrast to the plaintiff’s claim that lists the tank as being a 2,000 liter tank, and the plaintiff’s own testimony that it was a 1,750 gallon tank. As a result, the plaintiff’s claim respecting the propane tank is dismissed. VI. CONCLUSION

[ 35 ] For the reasons set out above, the plaintiff shall have judgement against the defendant in the amount of $20,810.00 ($20,600.00 + 210.00). The plaintiff, as well, shall receive the cost of the issuing this claim, which is $100.00. R. Green, J [1] Fridman, The Law of Torts in Canada (2d) (Thomson Canada Limited: Toronto, 2002) at p. 136. [2] See Watters v Gill , 2017 NSSM 12 at para 10 .