Docket: CACV2207 Eagle Eye Investments Inc. Appellant - v. -, 2012 SKCA 118

THE COURT OF APPEAL FOR SASKATCHEWAN Citation: 2012 SKCA 118 Date: 2012-12-06 Between: Docket: CACV2207 Eagle Eye Investments Inc. Appellant - and - CPC Networks Respondent Coram: Jackson, Ottenbreit & Herauf, JJ.A. Counsel: Bruce Wirth for the Appellant Clayton Barry for the Respondent Appeal: From: 2011 SKQB 436 Heard: June 24, 2012

Disposition: Appeal Dismissed Written Reasons: December 6, 2012 By: The Honourable Madam Justice Jackson In Concurrence: The Honourable Mr. Justice Ottenbreit The Honourable Mr. Justice Herauf Jackson J.A. I. Introduction [ 1 ] The issue in the within appeal is whether an “all obligations” clause, contained in an assigned security agreement, can secure the previously unsecured debts owing by the debtor to the assignee from a time before the assignment took place.

The Chambers judge held that the only amounts secured by the assigned security agreement were those owing by the debtor to the assignor at the time of the assignment (see: 2011 SKQB 436 ). I would dismiss the appeal, but not necessarily for all of the reasons given by the Chambers judge. II. Background Facts [ 2 ] The background facts are taken from the decision of the Chambers judge and are uncontroverted. [ 3 ] CPC Networks, which was incorporated on July 9, 2007, owns and operates the largest and fastest privately owned fibre-optic looped network in Saskatoon.

Larry Ayers, Jack Adams, Bernie Sabiston and Timothy Tkachuk were the initial shareholders, directors and officers. Larry Ayers was the president, Jack Adams was the chief financial officer and Bernie Sabiston and Timothy Tkachuk provided technical expertise.

In addition to being the Chief Financial Officer of CPC Networks, Jack Adams was also the president, sole director and sole beneficial owner of his own corporation, Eagle Eye Investments Inc., which through a subsidiary owns 130,000 shares of CPC Networks. [ 4 ] In February 2008, CPC Networks accepted a Letter of Offer from the Business Development Bank of Canada. According to the Letter of Offer, the Bank loaned $150,000 to CPC Networks and, as security, CPC Networks granted a General Security Agreement in favour of the Bank.

According to the General Security Agreement, CPC Networks granted the Bank a security interest in all of its present and after acquired property and agreed that the General Security Agreement was assignable without notice to CPC Networks. [ 5 ] The Letter of Offer specified a “Loan Amount” of $150,000 and contained a clause, saying “To the extent that any provision of the application for financing or any of the security is inconsistent with or in conflict with the provisions of this Letter of Offer, the provisions of this Letter of Offer shall govern.” [ 6 ] The relevant provisions of the General Security Agreement granted by CPC Networks to the Bank are as follows: 5.

OBLIGATIONS SECURED (The Security Interests and charges you have granted to BDC secure all indebtedness and obligations to BDC) This Security Agreement is in addition to and not in substitution for any other security interest or charge now or in the future held by BDC from the Borrower or from any other person and shall be general and continuing security for the payment and performance of all indebtedness, liabilities and obligations of the Borrower to BDC (including interest thereon), whether incurred prior to, at the time of or after the signing of this Security Agreement including extensions and renewals, and all other liabilities of the Borrower to BDC , present and future, absolute or contingent, joint or several, direct or indirect, matured or not, extended or renewed, wherever and however incurred, including all advances on current or running account, future advances and re-advances of any loans or credit by BDC and the Borrower’s obligation and liability under any contract or guarantee now or in the future in existence whereby the Borrower guarantees payment of the debts, liabilities, and/or obligations of a third party to BDC, and for the performance of all obligations of the Borrower to BDC, whether or not contained in this Security Agreement (all of which indebtedness, liabilities and obligations are collectively called the “Obligations”). …

25. ASSIGNMENT (Should BDC assign or transfer or otherwise deal with this Security Agreement on its own behalf, you agree that the Security Agreement shall remain binding and effective upon you.) BDC may, without notice to the Borrower, at any time assign or transfer, or grant a security interest in, all or any of the Obligations [defined above in clause 5], this Security Agreement and the Security Interests .

The Borrower agrees that the assignee, transferee or secured party, as the case may be, shall have all of BDC’s rights and remedies under this Security Agreement and the Borrower will not assert as a defense, counterclaim, right of set-off or otherwise any claim which it now has or may acquire in the future against BDC in respect of any claim made or any action commenced by such assignee, transferee or secured party, as the case may be, and will pay the assigned Obligations to the assignee, transferee or secured party, as the case may be, as the said Obligations become due. … 28.

ENUREMENT This Security Agreement shall enure to the benefit of BDC and its successors and assigns, and shall be binding upon the Borrowers and its heirs, executors, administrators, successors and any assigns permitted by BDC , as the case may be. [Emphasis added] [ 7 ] Between July 6, 2009 and November 30, 2009, according to the evidence of Mr. Adams, Eagle Eye loaned money to CPC Networks to pay expenses and to build its fibre-optic network. Eagle Eye claimed CPC Networks was indebted to it in the amount of $465,555.81. The loan was unsecured although Mr.

Adams pressed CPC Networks to provide security, which CPC Networks appeared at one point prepared to grant, but then ultimately refused to provide. [ 8 ] In February 2010, after CPC Networks refused to enter into a security agreement with Eagle Eye, the latter commenced an action against CPC Networks for the monies allegedly owed pursuant to the unsecured loan. CPC Networks, in its Statement of Defence, denied owing the monies on the terms or in the amount claimed, and advanced a counterclaim alleging that Mr. Adams took unauthorized payments from CPC Networks funds. [ 9 ] After the action was commenced, Mr.

Adams was removed as Chief Financial Officer of CPC Networks. Mr. Ayers eventually resigned as a director and officer on March 17, 2010. [ 10 ] In March 2010, Mr. Ayers incorporated Black Dove Capital Corp. On March 31, 2010, Black Dove gave notice to CPC Networks that the Bank had assigned the General Security Agreement and the Letter of Offer to Black Dove. Mr. Ayers facilitated the assignment. Mr. Ayers then sent an email to CPC Networks noting it for default and demanding full repayment of the remaining amount of the Bank loan ($140,000). Mr.

Ayers also advised CPC Networks that Black Dove had appointed him as interim receiver of CPC Networks until the loan was repaid. [ 11 ] CPC Networks disputed the demanded amount, and more specifically, an amount claimed by Mr. Ayers for professional services valued at $23,715 and a prepayment penalty charged by the Bank. [ 12 ] CPC Networks then applied pursuant to The Personal Property Security Act, 1993 , S.S. 1993, C. P-6.2 [ PPSA ], for an order: (

i) setting aside Mr. Ayers’s appointment as receiver; (ii) requiring Mr. Ayers to vacate CPC Networks’ office immediately; and (iii) enjoining Black Dove from taking any further enforcement actions regarding the loan without leave. That order was granted on April 15, 2010. [ 13 ] Following the April 15, 2010 order, CPC Networks, Black Dove and Mr. Ayers agreed on a payment

schedule with respect to the Bank loan. CPC Networks made all payments in this regard, such that as of October 24, 2011, $52,500 plus interest from October 10, 2011 remained to be paid on the debt. [ 14 ] In July 2011, Black Dove assigned the Bank loan to Eagle Eye. Eagle Eye then demanded payment, on or before July 8, 2011, of an annual management fee of $350 for each of 2010 and 2011, and requested that CPC Networks give it authorization for direct payments for all payments due after July 10, 2011.

Eagle Eye further demanded that CPC Networks provide bank statements, financial information, information regarding equipment purchases, and current customer lists. The failure to provide that information led Eagle Eye to state that CPC Networks was in default of the Bank General Security Agreement that Eagle Eye, as the assignee from Black Dove, now held.

[ 15 ] Mr. Tkachuk, who is now the Vice-President of Operations of CPC Networks, stated that because of these demands for financial and other information, CPC Networks requested a payout statement from Eagle Eye with a view to paying the amount remaining.

The payout statement sent by Eagle Eye indicated that CPC Networks owed $749,356.50: Bank loan $ 57,700.00 Eagle Eye loan $465,556.00 Costs $140,590.59 Interest $ 85,709.91 [ 16 ] On August 31, 2011, CPC Networks then brought another application under s. 63 of the PPSA for an order directing Eagle Eye to release and discharge the Bank security that had been assigned to it, upon payment of the amount properly owing under the General Security Agreement, to be determined by the Court.

It is that application that gives rise to the decision under appeal. [ 17 ] At the same time, Eagle Eye sought an order that CPC Networks provide documentation including bank statements and accounting data that Eagle Eye stated it was entitled to receive by virtue of the terms of the General Security Agreement. III.

Decision of the Chambers Judge [ 18 ] CPC Networks’ position throughout has been that the General Security Agreement secures liabilities that may have arisen between the Bank and CPC Networks only, i.e., the outstanding amount remaining to be repaid under the Letter of Offer in the approximate amount of $52,000. CPC Networks wanted to pay out this amount and obtain a discharge of the General Security Agreement. CPC Networks further asserted that Eagle Eye is not acting in good faith or in a commercially reasonable manner. It believes Mr. Ayers, Mr.

Adams, and Eagle Eye are abusing the court’s processes by engaging in multiple vindictive and vexatious lawsuits that are frivolous in nature. [ 19 ] Eagle Eye resists those arguments, saying first that the assignment resulted in the General Security Agreement now covering all other debts of CPC Networks owed to Eagle Eye on the footing that the General Security Agreement secured both the Bank loan and the Eagle Eye loan because Eagle Eye ‘stepped into the shoes’ of the Bank upon assignment.

As a consequence, so the argument goes, CPC Networks is not entitled to a discharge of the General Security Agreement until all of the monies owed pursuant to both loans are paid, which is approximately $465,000 as alleged by Eagle Eye. Eagle Eye also maintains that it did not act in bad faith and that its actions were commercially reasonable, and further, that it had legitimate business reasons to see CPC Networks’ records, citing Mr.

Tkachuk’s previous issues with accounting records and improperly adhering to generally accepted accounting principles. [ 20 ] The Chambers judge found that the General Security Agreement did not secure the unsecured debt owed by CPC Networks to Eagle Eye, and that the rights and obligations under the General Security Agreement, as acquired by Eagle Eye via the assignment, were not executed in good faith or in a commercially reasonable manner. He held that Mr. Ayers, Mr.

Adams, and Eagle Eye were trying to take advantage of the other shareholders of CPC Networks, especially in relation to another pending action between the parties. He granted the application and made the following order (at para. 44): 1. That the indebtedness outstanding on the BDC loan made between CPCN and BDC dated February 8, 2008 is $52,500 as of October 24, 2011, plus interest at 10.7% from October 10, 2011 to the date of payment.

As the BDC loan has been assigned to Eagle Eye, upon CPCN paying to Eagle Eye the said sum of $52,500 plus interest at the rate of 10.7% from October 10, 2011, and the prepayment penalty of three months’ further interest on the prepaid principal amount together with any discharge fees and costs paid to BDC as referred to in para. 42 hereof, Eagle Eye shall provide a release and discharge of the GSA [General Security Agreement]. 2. CPCN is entitled to its costs of the application which I fix at $2,400 based on double Column 4 of the Tariff, items 1, 5(a)(

i) and (c). [ 21 ] In granting the order, the Chambers judge reasoned in the following manner. Where there is conflict between the Letter of Offer and the General Security Agreement, he found that the Letter of Offer takes precedence. He then went on to find that the Letter of Offer “clearly refers to a loan of $150,000 plus interest and further provides for a right of prepayment of the loan if an indemnity equal to three months further interest on the principal is paid” (para. 25).

Based on this, he concluded that it would be contrary to the Letter of Offer to allow Eagle Eye to add its previously unsecured shareholders' loans to the amount owing under the original Letter of Offer with the Bank. He held that the reference to “other liabilities of the borrower” in the General Security Agreement means the other liabilities owing to the Bank. With that, he concluded that “the terms of the LA [Letter of Offer] and GSA [the General Security Agreement] are

clear that the security is in respect to the BDC [Business Development Bank of Canada] loan and not loans of third parties” (para. 25). [22] The Chambers judge referred to all the relevant decisions, which may be found in his reasons. He also referred to an

article byRoderick J. Wood entitled “Turning Lead into Gold: The Uncertain Alchemy of ‘All Obligations’ Clauses” (2004), 41 Alta. L. Rev. 801at 809, where the author states that courts have refused to convert unsecured claims into secured claims, when security is assigned, for avariety of reasons, including: (

i) it would be unfair to the debtor; (ii) it would have a destructive impact on the principle of pro ratasharing in bankruptcy law; and (iii) it would have a disruptive effect on the PPSA priority regime with a subsequent loss ofpredictability.

The Chambers judge was satisfied that these reasons supported his conclusion that the only amounts secured by theGeneral Security Agreement were the amounts owing by CPC Networks to the Bank and that the General Security Agreement does notcover any previously unsecured debts owed by CPC Networks to Eagle Eye. [23] Since the effect of the decision of the Chambers judge resulted in the General Security Agreement being discharged, Eagle Eye’sapplication to receive financial and other information from CPC Networks was in effect dismissed. IV. Analysis 1.

Application under The Personal Property Security Act, 1993 [24] As a preliminary matter, I note that the matter came to the Chambers judge as an application under s. 63(2) of the PPSA whichallows a “debtor” to apply to the Court of Queen’s Bench for an order “giving directions to any person regarding the exercise of rights orthe discharge of obligations pursuant to this Part.” The Part referred to is

Part V of the PPSA, which refers to "Rights and Remedies onDefault" and includes s. 62(1)(

a) of the PPSA. That clause reads as follows: 62(1) At any time before the secured party or a receiver has disposed of the collateral or contracted for disposition pursuant to

section 58or 59 or before the secured party is deemed to have irrevocably elected to retain the collateral pursuant to s. 61: (

a) a person who is entitled to receive a notice of disposition pursuant to subsection 59(6) or (10) may, unless that person otherwiseagrees in writing after default, redeem the collateral by: (

i) tendering fulfilment of the obligations secured by the collateral; and (ii) paying a sum equal to the reasonable expenses of seizing, repossessing, holding, repairing, processing and preparing the collateral fordisposition, if those expenses have actually been incurred by the secured party, and any other reasonable expenses incurred by thesecured party in enforcing the security agreement. [Emphasis added] [25] Since Eagle Eye considered that CPC Networks was in default for failing to provide financial and other information, CPC Networksapplied to the Court of Queen’s Bench under s. 63(2) of the PPSA to obtain an order fixing the amount owing under the General SecurityAgreement to allow it to tender fulfillment of the obligations secured by the agreement and to obtain an order discharging the security. [26] Thus the controversy is fixed over whether the amount owing under the General Security Agreement is the amount owing under theBank loan only or whether the amount owing includes the unsecured debt owing to Eagle Eye.

Determining the amount owing under theGeneral Security Agreement in this context takes the Court to the classic question of the effect of an assigned security agreement thatcontains an “all obligations” clause and the extensive analysis provided by Professor Wood in his above-mentioned article. To resolvethe question in dispute, the Court must determine whether the Letter of Offer and the General Security Agreement secure CPCNetworks’ unsecured debt to Eagle Eye. [27]

Section 63 of the PPSA expands the authority of the Court of Queen’s Bench to hear matters in chambers without an action beingcommenced beforehand (see: Ronald C.C. Cuming, Catherine Walsh & Roderick J. Wood, Personal Property Security Law, (Toronto,ON: Irwin Law, 2005) at pp. 574 to 576; Ronald C.C. Cuming & Roderick J. Wood, Saskatchewan and Manitoba Personal PropertySecurity Acts Handbook (N.p.: Carswell, 1994) at pp. 453-454); and Andrews v. Mack Financial (Canada) Ltd., (SKCA), [1988] 2 W.W.R. 747 (Sask. C.A.).

The exercise in this case, however, requires the Court to determine what the parties intendedwhen they entered into the Bank loan and the General Security Agreement. Such an exercise might, in another case, require that theCourt set the matter down for trial. Determining the intention of the parties may in any given case require an assessment of thecredibility of the witnesses. In this case, however, no dispute exists about the facts necessary to resolve the only issue in the case andneither party requested or wanted the Court to direct a trial of the issue.

They were content to have the Court pass on the matter in thecontext of affidavit evidence only. In all of the circumstances, it is appropriate for the Court to decide the issue in the context of s. 63.

2. Approach taken by the Chambers Judge [28] The Chambers judge has provided a thorough review of the issues and the law, and for the most part, his analysis is correct, with acouple of caveats. [29] In my respectful view, it is not necessary to answer the question whether a security agreement can ever secure the previouslyunsecured debts owing by the debtor to the assignee. Assuming that the priority system in bankruptcy and under the PPSA is notaffected and the assignee behaves in a commercially reasonable manner, what rule of law prevents a debtor from agreeing to anassignable, all obligations clause?

The ratio of this decision should not be that, as a matter of contract law or secured transactions law, adebtor and a secured party can never agree to an assignment of an agreement containing an all obligations clause permitting the securedparty to assign the security to a third party, who holds a prior unsecured debt, and thereby secure that past unsecured indebtedness. [30] A security agreement must be construed as a specialized form of contract, but the principles of contract law are also in play. Theoverarching principle of contract

interpretation is to give effect to the intention of the parties—keeping in mind, as may be necessary, thenature of the contract as a security agreement and having regard for commercial reasonableness, good faith and the priority structure bothinside and outside of bankruptcy.

Further, courts must give sufficient respect to the principles of secured transactions law that allowsecurity agreements to secure past and present indebtedness, as well as future indebtedness, and thereby, give effect to what are known inthe trade as “all obligations” clauses. [31] As has often been said, in the context of secured transactions law, “constraints on freedom of contract should not be readily impliedin the absence of clear legislative direction” (see: Personal Property Security Law, supra at p. 27).

A court must be concerned aboutfairness and the effect on bankruptcy and other priorities, but if the contract will have no effect on priorities, there may well be nothingpreventing an assignee from converting unsecured debt into secured debt, if that is the intention of the contracting parties. [32] I find support for this view in this passage taken from Personal Property Security Law, supra at pp. 319-21: … [C]ourts have been unwilling to permit an assignee to claim the benefit of an all obligations clause in respect of obligationsincurred by the assignee before the assignment.

It is not entirely clear whether these courts have decided that this outcome is impossibleas a matter of law, or if they have simply determined that the clause used in the agreement was not sufficient to produce this result. InEngland, Australia, and New Zealand, the courts have embraced the former argument and have held that only the clearest of language inthe security agreement would permit an unsecured creditor to obtain secured creditor status by taking an assignment of a securityagreement that contains an all obligations clause.

In Canada, some courts take the view that the result is impossible as a matter of law. … The authors are of the view that the idea that there is a substantive rule of law that prevents the parties from extending all obligationsclauses to cover obligations that were originally owed to another person is an overreaction to the problem. … The authors are of theopinion that a more selective approach is required … . [Emphasis added] Or in the words of Professor Wood, “[i]stead of outright invalidation, a more selective approach is needed” (Wood, supra, at p. 817). [33] Thus, I prefer an approach that answers the question raised by the contracts and the circumstances of the within appeal only.

Thewithin appeal is best resolved on the basis of construing the contracts in question. 3. What did the Parties Intend? [34] The main issue is this: as a matter of

interpretation of the governing contracts, did the parties intend that the “all obligations”clause contained in the General Security Agreement means that an assignee from the Bank could secure its prior unsecured debts? Iagree with the Chambers judge that this issue must be resolved against the assignee, Eagle Eye. [35] The Court must first interpret the General Security Agreement and the Letter of Offer to determine whether the original contractingparties intended the assignment clause to secure the unsecured debts of a future assignee.

If the parties did so intend, the Court wouldthen have to determine whether a commercially defensible reason exists preventing the General Security Agreement from operating inthat manner. In the within appeal, however, the Court does not reach the second question. [36] Ascertaining the intention of contracting parties is an objective exercise informed by the factual matrix surrounding the formationof the contract with the words in the contract being given their natural and ordinary meanings unless absurdity would result (see:SaskPower International Inc. v. UMA/B&V Ltd., 2007 SKCA 40, [2007] 6 W.W.R. 277).

A contract is to be interpreted as of when it isexecuted (see: Consolidated-Bathurst Export Ltd. v. Mutual Boiler and Machinery Insurance Co., (SCC), [1980] 1

S.C.R. 888 at 901). Further, the meaning of a contract should not change as time passes (see: Geoff R. Hall, Canadian Contractual

Interpretation Law , 2nd ed. (Markham, ON: LexisNexis Canada, 2012) at 52). Applying these principles to the within appeal excludes much of the affidavit evidence before the Court for the purposes of contractual

interpretation as the evidence focuses on the conduct and intentions of various individuals after entry into the General Security Agreement. [ 37 ] The factual matrix surrounding the signing of the Letter of Offer and the General Security Agreement includes that CPC Networks was a start-up corporation needing to secure debt financing. Mr. Ayers and Mr. Adams secured the loan and admit that, at the time, the Bank was the only lender willing to provide financing. The Letter of Offer and the General Security Agreement are standard form contracts.

The bargain did not depend upon permitting the assignment of the security agreement including its all obligations clause to a third party. It is reasonable to infer that CPC Networks was in the position of having to ‘take-it-or-leave-it.’ [ 38 ] Considering the factual matrix, it does not appear objectively that the Bank and CPC Networks intended that the General Security Agreement would cover the unsecured debts of CPC Networks that may be owed to a third party upon assignment.

While the General Security Agreement permits an assignment without notice, it does not state that upon assignment, the General Security Agreement will act to secure any and all unsecured debts previously owed to the assignee.

Financial institutions, such as the Bank, are certainly concerned about the debts that may be owed to them, but it is a stretch to assume, without clear words that a financial institution and the debtor intend that an “all obligations” clause secures, upon assignment, the debtor’s unsecured debts to the assignee. [ 39 ] Eagle Eye submits that, in receiving the assignment of the General Security Agreement, it ‘stepped into the shoes’ of the Bank, such that this would allow it to use the General Security Agreement to secure the previously unsecured debts owed to it by CPC Networks.

Eagle Eye relies on the wording of the assignment clause in support of its argument, specifically where the clause states that “[t]he Borrower agrees that the assignee … shall have all of BDC’s rights and remedies under this Security Agreement….” It further relies on the broad wording of the General Security Agreement, which states that the security agreement “shall be general and continuing security for the payment and performance of all indebtedness, liabilities and obligations of the Borrower to BDC … whether incurred prior to, at the time of or after the signing of this Security Agreement….” Eagle Eye’s submission is not supported by the application of the principles of contractual

interpretation in this case. [ 40 ] In the within appeal, no provision in the loan documents or the General Security Agreement clearly expresses an intention by the Bank with respect to the unsecured debts of a third party. It is one thing for a financial institution to intend to secure its own past, present and future debts, but quite another for it to intend to secure the past unsecured debts of others. In saying this, I would not want to be taken as saying that a vulnerable debtor could not, as a matter of contract, intend to create such a clause.

The point is that the agreements to be construed in the within appeal, viewed in light of the factual matrix, do not demonstrate that the parties intended at the time of contracting that the General Security Agreement would operate in the way suggested by Eagle Eye. [ 41 ] As Professor Wood indicates “[t]he interpretive approach has been applied consistently across several different jurisdictions” (see Wood, supra at p. 812). In support of this statement—in the context of the assignment of claims to a secured party—he mentions McVeigh v. National Australia Bank Ltd. , [2000] F.C.A. 187, 278 A.L.R. 429.

He also mentions Town Oil (Receiver of) v. Bank of Montreal , [1988] B.C.J. No. 826 (C.A.) (QL) where the Court concluded that the parties intended that an all obligations clause should cover obligations assigned to the secured party even though the clause did not refer specifically to such obligations. [ 42 ] The Chambers judge was correct to review the existing authorities cited by Professor Wood, but as the author states, many of these authorities do not state as a matter of principle that a debtor cannot agree to such a clause.

By and large they hold that the particular drafting of the “all obligations” clause in the security agreement was not sufficiently clear and unequivocal to produce any other result than that the clause did not extend to the debtor’s past indebtedness to the assignee (see: Wood, pp. 809-810). Other decisions referred to by Professor Wood involve a disruption of either the bankruptcy or secured transactions priority regimes. The significance of the case law, however, is that it confirms a restrictive

interpretation of the assigned security agreement in the within appeal. [ 43 ] With this conclusion, it is not necessary to consider the trial judge’s finding that Eagle Eye and its principals were acting in bad faith and not in a commercially reasonable manner. If the Court had found that the parties had intended that the all obligations clause could secure the prior unsecured debts of an assignee, any question of bad faith or lack of commercial reasonableness would not enter the equation. [ 44 ] One final point must be made.

The Chambers judge held that it would be contrary to the Letter of Offer to allow Eagle Eye to add its previously unsecured shareholders’ loans to the amount owing under the original Letter of Offer with the Bank. I do not take the Chambers judge as saying that the Letter of Offer restricts the force of the obligations clause as between the original contracting parties when the parties so intend. Such an

interpretation may affect other significant aspects of secured

transactions law that do permit future advance financing (see: Personal Property Security Law, supra at p. 317). VII. Conclusion [ 45 ] The appeal is dismissed with costs in the usual way. DATED at the City of Regina, in the Province of Saskatchewan, this 6th day of December, A.D. 2012. __ “Jackson J.A.” _____________________ Jackson J.A. I concur __ “Ottenbreit J.A.” ___________________ Ottenbreit J.A. I concur ___ “Herauf J.A.” _____________________ Herauf J.A.