LYLE THEODORE ODELEIN PLAINTIFF - v. –, 2023 SKKB 86

KING’S BENCH FOR SASKATCHEWAN Citation: 2023 SKKB 86 Date: 2023 04 24 Docket: QBG-SA-00367-2015 Judicial Centre: Saskatoon BETWEEN: LYLE THEODORE ODELEIN PLAINTIFF - and – ODELEIN FARMS LTD. DEFENDANT Counsel: Robert G. Kennedy, K.C. for the plaintiff Douglas C. Hodson, K.C. for the defendant ___________________________________________________________________________ FIAT CURRIE J. April 24, 2023 ___________________________________________________________________________ Introduction [ 1 ] The parties are in the midst of a

summary judgment application before me. In an earlier decision I directed that certain witnesses will testify in this

summary judgment process, and a hearing for that purpose has been scheduled. [ 2 ] Lyle Odelein now applies for leave to call an additional witness to testify at that hearing, and for leave to introduce a document into evidence at that hearing. History of the proceedings [ 3 ] In this action Lyle Odelein (“Lyle”) sues Odelein Farms Ltd. (“Farms”) in relation to the farm business that is operated by Farms. This action had been dealt with earlier by a judge of this court, on Lyle’s

summary judgment application. That judge’s decision was appealed by Lyle, and it was dealt with by the Court of Appeal at 2022 SKCA 28 . At the outset of the Court of Appeal’s decision Justice Ottenbreit summarized the circumstances at paras. 4-11:

[4] Eric and Hilda Odelein operated a family farm near Quill Lake, Saskatchewan. They had three sons: Lyle, Lee and Selmar. All three sons played hockey. As their respective hockey careers began to take off in their teenage years, Lyle and Selmar discussed that, if either of them succeeded as a professional hockey player, they would re-invest their earnings in the farm so that they could farm together at the end of their hockey careers. Lyle eventually established a full-time career in the National Hockey League [NHL].

Selmar did not. [5] In 2001, while Lyle was still playing hockey in the NHL, the Odeleins incorporated their farming operation and created Farms. The land and equipment previously owned by the members of the family, some of it jointly, was rolled over into Farms in exchange for shares in the corporation. This included land that was owned by Lyle. The transaction was well-documented with a Rollover Agreement and a Sale of Assets Agreement executed for each member of the family who contributed assets to Farms.

The Odeleins had the benefit of tax and legal advice for the incorporation and rollover transactions. [6] The value of the rolled over assets was reflected on Farms’ financial records as shareholder loans owing to the initial shareholders, all of whom were members of the Odelein family.

For the purposes of this appeal, the relevant shareholder loan owing to Lyle at the time of incorporation was $819,566. [7] After the incorporation of Farms, Lyle continued to play professional hockey and he used some of his hockey earnings to purchase, lease or put a down payment on various pieces of farm equipment on behalf of or for Farms. The amount he contributed to Farms pursuant to these transactions totalled $1,627,975. [8] After Lyle retired from hockey in 2006, he continued to work on the family farm during the summer months until 2012.

When he became engaged to be married to his second wife in the fall of 2011 and it became clear that he would be giving up farming with his brothers, he requested payment of his shareholder loan account in Farms and attempted to discuss the terms of payment to him over time with his family. Selmar and the rest of the Odelein family members, all shareholders in Farms, disputed his entitlement to repayment. Lyle was told that none of the family members expected to be paid out the balance of their shareholder loans because all of their contributions were intended for the benefit of the family farm.

Moreover, the family members reminded Lyle that he had repeatedly told them over the years that he wanted nothing out of the farm. [9] With regard to Lyle’s purchase/lease of farm equipment, Farms alleged that it only allowed Lyle to purchase and lease machinery because he had assured the family that it was a gift to Farms and to “set up the farm” for the benefit of the family. However, Lyle’s payments for equipment and leases on behalf of Farms were entered on the books by its accountants as shareholder loans or debts owing by Farms to Lyle.

The other shareholders of Farms allege that they were unaware of how the accountants had entered those transactions. [10] It is uncontroverted that the shareholder loans for Lyle and other family members remained on Farms’ books year after year and were reported as such for accounting and tax purposes. The balances thereof fluctuated based on debits and credits to the various shareholder accounts as contributions to and payment from Farms occurred. Over the years, Farms repaid in excess of $400,000 of Lyle’s shareholder loan.

By 2016, Farms had also repaid almost all of the shareholder loans owed to the other shareholders. [11] Lyle claims that Farms owes him $2,182,322 for the contributions he made to Farms on incorporation and thereafter between 2001 and 2006. When Farms refused to pay to Lyle the amount outstanding in his shareholder loan account, he commenced an action against Farms to recover the money. [ 4 ] The Court of Appeal allowed the appeal and remitted the action back to this court, for the

summary judgment application to be determined anew. The application came before me, and the evidence that is before me provides the same information as was related by Justice Ottenbreit in the above excerpt. [ 5 ] In refusing to pay, Farms denies that the shareholder loans shown in the financial statements are truly debts. Its first defence is that the assets and money that Lyle provided to Farms over the years are properly characterized in law as gifts.

Farms says that Lyle told Farms that he did not want anything out of the farm, and that he did not expect to be repaid. [ 6 ] In the alternative, Farms says that Lyle’s statements that he did not expect to be repaid any such amounts, combined with Farms’ reliance on such statements to its detriment, establish the defence of promissory estoppel. [ 7 ] In the further alternative, Farms says that Lyle waived any right to recover his shareholder loan. [ 8 ] In the additional further alternative, Farms says that if a debt exists it is not a demand loan but is to be repaid at a time and on terms agreed to by the shareholders. [ 9 ] Finally, in the alternative, Farms says that if a debt exists, and if it is a demand loan, then Lyle’s claim is barred by the effluxion of time under the provisions of The Limitations Act , SS 2004, c L-16.1 . [ 10 ] Therefore, these issues stand to be determined in this action and thus on Lyle’s

summary judgment application: (

a) Was Lyle’s contribution of assets and money a gift, or is the shareholder loan a debt that is owed by Farms to Lyle? (

b) If there is a debt, did Lyle assure Farms that he did not expect to be repaid any such amounts, and did Farms rely on such assurances to its detriment, so that promissory estoppel prevents Lyle from obtaining repayment of the shareholder loan? (

c) If there is a debt, did Lyle waive any right to obtain repayment? (

d) If there is a debt, is it to be repaid at a time and on terms agreed to by the parties, or is it a demand loan? (

e) If there is a debt, and if it is a demand loan, is Lyle’s claim barred by the effluxion of time under the provisions of The Limitations Act ?

[ 11 ] Following the Court of Appeal’s return of the matter to this court, Lyle’s

summary judgment application was argued before me. I then issued an unreported decision in which I directed that the application will continue in a hearing for the presentation of the oral evidence of the shareholders of Farms. Those shareholders (all with the surname Odelein) are Lyle, Eric, Hilda, Selmar and Sandra. The hearing is scheduled. [ 12 ] Lyle now applies for an order permitting him to: (

a) call Kelly Lutz to testify at the hearing; and (

b) adduce in evidence at the hearing his unredacted divorce judgment, which was issued by a court in Texas. [ 13 ] Kelly Lutz is an accountant. As an accountant, he was involved in the creation of Farms and in the parties’ dealings with assets that eventually became assets of Farms. Neither party has filed any evidence (e.g. affidavit evidence) from Mr. Lutz on the

summary judgment application. [ 14 ] Lyle’s redacted divorce judgment already is in evidence on the

summary judgment application. Determination [ 15 ] The key to my determination of Lyle’s application is in the reasons that I provided in my earlier unreported decision, where I directed the hearing that now is scheduled. [ 16 ] In that decision I reviewed the legal requirement that I first would have to decide whether to determine the action summarily, as requested by Lyle, as opposed to sending it on to trial. In so doing I quoted the discussion in Sunrise Foods International Inc. v MGM Specialty Livestock Ltd. , 2020 SKQB 312 at paras 8-10 . The primary principle derived from that discussion is that the judge on a

summary judgment application may determine the action summarily only if the judge can resolve controverted facts without the need for trial evidence. [ 17 ] I then identified the controverted facts in the evidence before me. Turning to whether those controverted facts can be resolved without a trial, I wrote: [27] The overriding factual question on this application (and in this action) is “What are the circumstances in which Lyle provided land, equipment and money to Farms?”.

If I am confident that I can answer this question justly and fairly, on the basis of the material that is before me, then I will be confident that I can determine this application without directing that a trial be held. … [39] There is some attraction to Farms’ argument, but I hesitate to adopt it without hearing and observing the shareholders as they describe the circumstances. Similarly, while there is some attraction to Lyle’s arguments I find myself uncomfortable with adopting them without that oral evidence.

Even though I have before me the affidavits and the transcripts of the cross-examinations, I find myself needing to hear and observe the shareholders as they relate what occurred. [40] The facts here (falling under the umbrella question “What are the circumstances in which Lyle provided land, equipment and money to Farms?”) are key to determining the issues. A significant factor in determining the facts is the determination of the credibility and reliability of the shareholders.

I may determine that credibility and reliability without a trial only if I am confident that, as summarized by Justice Barrington-Foote in Tchozewski v Lamontagne , 2014 SKQB 71 , [2014] 7 WWR 397 at para 30 (3), doing so is the appropriate way to: … find the facts and apply the relevant legal principles so as to fairly resolve the dispute. If the judge has that confidence, proceeding to trial is generally not proportionate, timely or cost effective.

As Justice Barrington-Foote added, though: A process that does not give the judge confidence in his or her conclusions, on the other hand, is never proportionate. [41] I am not confident that the evidence that is before me (extensive though it is) permits me to make the credibility and reliability determinations that are necessary to fairly resolve the issues.

I must have the benefit of hearing and observing the shareholders as they explain what they did and said and understood, and why. [42] In the end, if I were to deliver a judgment in favour of either Lyle or Farms on the basis of the evidence that is before me here, I would be uneasy. I would be troubled by the possibility that my ultimate conclusion might have been different if only I had had the shareholders testify before me. Put another way, without oral evidence from the shareholders I do not have the confidence that is necessary to decide this matter on a

summary basis. I am not confident that deciding the matter without that evidence will fairly resolve the dispute. [43] I do not conclude that there are genuine issues requiring a trial. Rather, I am confident that once I have heard and observed the shareholders testify in a hearing in the context of this

summary judgment application, I will be able to determine all issues justly – if necessary, through the fact-finding power that is referred to in Rule 7-2(b). To make this happen, under Rule 7-3 I am ordering that oral evidence be presented in a hearing. [ 18 ] I then went on to provide specific directions as to the hearing at which the shareholders – Lyle, Eric, Hilda, Selmar and Sandra – will testify. [ 19 ] These excerpts from my earlier decision are key to my decision here because they establish precisely why the hearing will take place. Broadly, the hearing will take place so that I can determine this action on a

summary basis, without the need for

a trial. Specifically, the only impediment to my making that determination is my need to have the shareholders testify. [ 20 ] I did not determine that the absence of any other evidence was an impediment to my determining the action on a

summary basis. Nor is that my view now. [ 21 ] Lyle argues, though, that when I declared that I cannot decide the action on the affidavit evidence alone I opened the door for either side to call other additional evidence at the hearing. That argument is based on an erroneous characterization of my ruling. I did not simply declare that I cannot decide the action on the affidavit evidence alone. Rather, I specified that I can decide the action, once I hear the oral evidence of the shareholders. [ 22 ] Furthermore, permitting the parties now to present additional evidence (other than that specified by me) would undermine the

summary judgment process. On a

summary judgment application, a party is required to put his or her best foot forward, in the sense of putting before the court any and all evidence that the party may feel will support its case. This obligation was described by Justice Herauf in Peter Ballantyne Cree Nation v Canada (Attorney General) , 2016 SKCA 124 , [2017] 1 WWR 685 at paras 30-31 : 30 Simply put, the onus and shifting burden of proof can be gleaned from the Rules [ The Queen’s Bench Rules ] . The applicant(

s) for

summary judgment (in this case all of the defendants) bear the evidentiary burden of showing there is no "genuine issue requiring a trial" (see Rule 7-2). The applicant must do so with supporting material or other evidence. In essence, an applicant for

summary judgment must put its best foot forward. Failure to do so may result in the dismissal of the application since the court will assume that the record contains all the evidence the parties would present if there was a trial: see Canadian Broadcasting Corporation v Whatcott , 2016 SKCA 17 at paras 17 and 27 , 395 DLR (4th) 278 . 31 If the applicant for

summary judgment discharges its evidentiary burden by proving there is no genuine issue which requires a trial, the burden shifts to the responding party to counter this by showing "there is a genuine issue requiring a trial" (see Rule 7-3(1)). Once again, the party responding to an application for

summary judgment must file supporting affidavits or evidence in support of its position and put its best foot forward. [ 23 ] Thus Lyle, as the applicant on this

summary judgment application, chose which evidence to adduce and which evidence not to adduce in support of his application. Once Farms had filed its response evidence, Lyle knew the facts and positions that Farms was asserting, and he chose which evidence to adduce and which evidence not to adduce in reply. [ 24 ] Pursuant to The Queen’s Bench Rules, the parties filed briefs of their arguments prior to the initial hearing of the

summary judgment application and prior to the subsequent hearing before me. On each occasion, once he had received Farms’ brief, Lyle knew the positions and arguments that Farms was asserting. He did not suggest to the court that Farms’ brief included positions or arguments that might require additional evidence being put before the court. He did not seek leave of the court to adduce any additional evidence. [ 25 ] Lyle has made his choice as to the evidence that he wishes the court to take into account on his

summary judgment application. Allowing Lyle now to change his mind as to which evidence to put before the court would undermine the “best foot forward” principle, adding delay, uncertainty and inefficiency to the

summary judgment process. [ 26 ] For example, in evidence already is at least one affidavit from each of the shareholders, along with the transcripts of the cross-examinations on those affidavits. There will be no surprises for either Lyle or Farms in the testimony of the shareholders at the hearing. In contrast, there is nothing from Mr. Lutz in evidence. Farms does not know what he would say under oath at the hearing. It requires no great imagination to contemplate Mr.

Lutz’s testimony being followed by Farms’ request for an adjournment of the hearing so that Farms could pursue rebuttal evidence, having learned what the new evidence is. [ 27 ] Thus, even more delay and expense would be added to a process that is intended to reduce delay and expense. [ 28 ] Finally, Lyle will suffer no prejudice as a result of being unable to call Mr. Lutz at the hearing. He remains in precisely the situation that he elected to be in on his

summary judgment application. He has chosen not to put evidence of Mr. Lutz before the court, and that remains the situation. [ 29 ] Lyle’s application is dismissed with costs. ______________________________J. G.M. CURRIE