Naber v Calidon Equipment Leasing, 2018 SKCA 103

Court of Appeal for Saskatchewan Docket: CACV3228 Citation: Naber v Calidon Equipment Leasing , 2018 SKCA 103 Date: 2018-12-28 Between: Todd Naber, Colleen Naber and Naber Specialty Grains Ltd. Appellants And Calidon Equipment Leasing – Calidon Financial Services Inc. Respondent Before: Jackson, Caldwell and Leurer JJ.A. Disposition: Appeal dismissed Written reasons by: The Honourable Madam Justice Jackson In concurrence: The Honourable Mr. Justice Caldwell The Honourable Mr.

Justice Leurer On Appeal From: 2018 SKQB 84 , Melfort Appeal Heard: October 2, 2018 Counsel : Michael Mahon for the Appellant John Rozdilsky for the Respondent Jackson J.A. [ 1 ] Todd Naber, Colleen Naber and Naber Specialty Grains Ltd. [the Nabers] entered into six leases of farm equipment with Calidon Equipment Leasing – Calidon Financial Services Inc. [Calidon]. The equipment included a cultivator, an air tank (with a metering system), fertilizer bins, grain trailers, grain belt headers, and a tandem disk. The purchase price assigned to the leased property was $606,609.

Leasing costs amounted to approximately an additional $170,000. [ 2 ] The Nabers have not made any payments to Calidon since March of 2016. Another creditor, John Deere, obtained a court order compelling payment with respect to other equipment. In 2017, the Nabers paid approximately $700,000 to John Deere to avoid the pending seizure of other equipment essential to the Nabers’ farming operation. Poor and delayed harvests, and a lack of railcars, combined to impede payment to the Nabers’ other creditors.

In July of 2017, Calidon began enforcement proceedings to take possession of the leased equipment. [ 3 ] Calidon served the Nabers with notices of intent to take possession pursuant to The Saskatchewan Farm Security Act, SS 1988-89, c S-17.1 [ Act ] on July 6, 2017. The Nabers made various commitments to bring all the leases up to date in 2017, but were not able to fulfill any of them. The Nabers also tendered a cheque for $25,000 on August 3, 2017 as partial payment towards arrears and then tendered a second cheque in the amount of $10,000 in December of 2017, as further partial payment.

Calidon declined these payments to prevent the triggering of s. 54 of the Act (acceptance of payment cancels notice). [ 4 ] In January of 2018, the Nabers brought an application, pursuant to s. 50 the Act , seeking relief from forfeiture of the leased equipment due to temporary financial hardship so as to permit them to plant and harvest a crop in 2018 and thereby earn the funds to pay Calidon. The Chambers judge dismissed their application and ordered them to deliver the leased equipment to Calidon without further delay: Naber v Calidon Equipment Leasing , 2018 SKQB 84 at para 22 .

The Chambers judge held that the Nabers had failed to establish either that their inability to pay arose from temporary circumstances or that postponing forfeiture for a period of eight months, which is what had been requested at the time, was reasonably temporary in nature. [ 5 ] According to the evidence that Calidon provided to the Court of Queen’s Bench, the current arrears (as of February 28, 2018) amounted to $458,073.52. The Chambers judge repeated this figure at two points in his reasons: [5] The Nabers are once again in arrears and the current arrears on all the contracts are $458,072.42 [ sic ].

The Nabers propose making an immediate payment of $35,000 to secure an adjournment of the enforcement proceedings to May 1, 2018. The Nabers propose to make a further payment of $50,000 on or before May 1, 2018 and intend to catch up on all of the arrears once they have completed the 2018 harvest. … … [17] I have had regard to the equitable considerations listed by Mills J. in the Bartko decision. The current indebtedness is the significant amount of $458,073.42 [ sic ] comprising two years of arrears . Four of the six leases have expired with the remaining two to expire within the next few months.

The last payment was made in March of 2016 although I take note that the Nabers attempted to make a payment of $25,000 in August, 2017 and a further payment of $10,000 in December, 2017. Even if Calidon had accepted those payments, $35,000 represents a very small portion of the amount owing. [18] Nor do I not accept that the Nabers have significant equity in the leased equipment. A review of the contracts establishes as follows: Contract Number Purchase Price Amount Owing 6409 $75,372 $43,858.23 6891 $114,000 $97,675.71 8155 $105,536 $86,996.43 6808 $105,000 $57,988.76

6959 $88,000 $50,043.68 10973 $118,701 $121,510.71 [ 6 ] The total of the first column is $606,609, and of the second, $458,073.52. The Nabers say the Chambers judge accepted Calidon’s statement of the arrears in the second column, which includes monthly interest of 24%, as the basis of comparison. They say he should have compared what they were offering to pay, which was $85,000 by May 1, 2018, and the actual amount owing, without penalty interest, which was considerably less, i.e., approximately $375,000.

According to this submission, if the Chambers judge had compared the correct dollar amounts, he would have granted them their adjournment and then, ultimately, postponed delivery, allowing time to pay. [ 7 ] The order giving effect to the judgment was taken out on March 14, 2018 [the Order]. Before the Order could be acted upon, the Nabers filed a notice of appeal on April 4, 2018. The effect of their filing a notice of appeal was to stay the Order. Calidon did not, however, apply to lift the stay.

Calidon had wanted to regain possession of the equipment before spring seeding in 2018 so as to maximize its realizable value and avoid further depreciation costs. Since the Order was stayed, the Nabers planted their crops and had almost completed harvesting by the time the appeal was heard – thus, obtaining what they had sought in their s. 53 application.

While the passage of time has rendered the principal issue that had been before the Chambers judge virtually moot, there remains a second series of issues, which is linked to the amount of the arrears payable under the leases. [ 8 ] The Nabers submit that by accepting the amount owing as $458,073.42, the Chambers judge has fixed what they must pay in order to ultimately become the owners of the leased equipment, without any consideration of the effect of s. 60(1) of the Act : Court order postponement 60(1) During the period that : (

a) the operation of an order for delivery of an implement is postponed pursuant to

section 53 or 58; or (

b) the matter is adjourned for mediation pursuant to this Act or the Farm Debt Mediation Act (Canada); no further sum shall be or become payable by the farmer on account of the unpaid balance under the agreement except in accordance with the terms of an order made pursuant to

section 53 or 58. (Emphasis added) [ 9 ] The Nabers assert their application in January of 2018 should have “stopped the clock” on their continuing obligation under the leases to pay interest in the amount of 24% monthly. While this argument is appropriately before us, being a question of law within the meaning of s. 106 of the Act , it is, however, completely misplaced. It is not the filing of the application for a hearing that triggers the operation of s. 60(1) , rather it is the postponing of an order under s. 53. The Chambers judge did not make any such postponement order.

He ordered the immediate delivery of the leased equipment. Further, all charges alleged to constitute penalty interest accrued before the hearing under s. 53 actually took place. [ 10 ] The Nabers have one final argument in relation to the amount outstanding. They say that the Chambers judge should not have fixed the amount owing.

In addition to submitting that the amount is in error, they assert the Chambers judge has prejudiced them in their future negotiations with Calidon, particularly if they are in a position to pay all amounts owing under the lease without the penalty of interest being calculated at 24%. (It should be noted that by the time this appeal was heard, all of the leases had come to an end.) [ 11 ] The Order does not fix the amount owing, but simply directs the Nabers to deliver the equipment to Calidon. In further responding to this argument, I also do not read the Chambers judge’s reasons as fixing the amount payable.

He used the amount of $458,073.42 for comparison purposes only. If he erred in calculating this amount, the error goes to the issue of whether the Chambers judge should have ordered the postponement of the delivery of the leased equipment. If he had ordered the postponement, and if the parties had requested that he fix the amount owing, another set of issues would arise, including whether the Chambers judge would have the authority on an application under s. 53 to resolve the contractual dispute, if any, between the parties. (In that regard, see Donald H.

Layh, A Legacy of Protection (Langenburg, Sask: Twin Valley Books, 2009) at 413–426). [ 12 ] In oral submissions made on behalf of the Nabers to this Court, their counsel questioned the exact amount owing to purchase the leased equipment outright or to allow them to redeem the collateral if it is delivered to Calidon. In our view, this matter is not properly before us nor are we in a position to respond to these submissions. No legal arguments were presented to the Court of Queen’s Bench or to this Court to allow a proper exploration of the powers of a court under s. 53.

Further, the only numbers that the Court has are those that Calidon provided to the Chambers judge.

If Calidon takes delivery, it will be up to the Nabers to either further negotiate with Calidon, or take whatever legal remedies may be available to them under the common law or the governing statute law, including The Personal Property Security Act , 1993 , SS 1993, c P-6.2. [ 13 ] In short, we read the reasons of the Chambers judge as leaving open the question of the actual amount owing to Calidon for the parties to agree upon or to make whatever further application to the court as may be necessary. [ 14 ] That leaves the question of costs.

Section 61 of the Act provides as follows: Costs 61(1) Subject to subsections (2) and (3), no costs shall be awarded to either party with respect to any proceedings under this Part .

(2) Where, in the opinion of the court, an application made to it is an abuse of the applicant’s right to make the application, the court may order payment of costs by the applicant.

(3) Where costs of an application are ordered to be paid by the farmer, the court may order that the costs be added to the amount remaining payable under the agreement. (Emphasis added) [ 15 ]

Section 61 is contained in “Part IV – Possession of Equipment”. The right of appeal, being s. 106 , is not contained in

Part IV.

Section 106 is contained in “Part VII – General Provisions”. This gives rise to the question whether this Court has the authority to award costs when a party appeals an order made pursuant to s. 53. I need not decide that issue on this appeal as I would, in any event, not make an order as to costs. Calidon did not apply to lift the stay and the passage of time has rendered the appeal essentially moot. [ 16 ] In the result, the appeal is dismissed with no order as to costs. As the appeal is dismissed, the Order of the Chambers judge is now in force.

The Nabers are directed to deliver the leased equipment to Calidon without further delay. “Jackson J.A.” Jackson J.A. I concur. “Caldwell J.A.” Caldwell J.A. I concur. “Jackson J.A.” for Leurer J.A.