Gustafson v Future Four Agro Inc., 2019 SKCA 68

Court of Appeal for Saskatchewan Docket: CACV3305 Citation: Gustafson v Future Four Agro Inc. , 2019 SKCA 68 Date: 2019-07-30 Between: Terry Gustafson Appellant (Defendant) And Future Four Agro Inc. Respondent (Plaintiff) Before: Whitmore, Ryan-Froslie and Barrington-Foote JJ.A. Disposition: Appeal dismissed Written reasons by: The Court On Appeal From: QBG 431 of 2017, Regina Appeal Heard: April 3, 2019 Counsel: Kevin Mellor for the Appellant James Rose for the Respondent The Court I.

Introduction [ 1 ] On December 19, 2017, a Queen’s Bench judge granted a consent order [Consent Order] which provided that if the appellant failed to serve his affidavit of documents on the respondent by January 31, 2018, the appellant’s statement of defence and counterclaim would be struck. The appellant failed to meet that deadline and the respondent applied to have the appellant’s statement of defence and counterclaim struck.

In response, the appellant served his affidavit of documents and applied to the Court of Queen’s Bench for an order extending the deadline for service of the affidavit of documents to the date on which it was served, namely February 12, 2018. [ 2 ] In a September 11, 2018 fiat [ Chambers Decision ], the Chambers judge declined to extend the deadline for service and ordered that the appellant’s statement of defence and counterclaim be struck. The appellant asks this Court to overturn those decisions. For the following reasons, we would dismiss the appeal. II.

Background [ 3 ] The appellant is a farmer who purchased inputs from the respondent. The appellant claims the respondent was employing fraudulent billing practices and declined to pay for inputs he says were not delivered by the respondent. [ 4 ] The respondent commenced an action against the appellant for his nonpayment in the amount of $1,101,311.26, together with interest. The respondent provided its affidavit of documents on October 5, 2017.

After some initial difficulty in obtaining a response from the appellant, the respondent received correspondence dated November 16, 2017, advising that the appellant would be in a position to provide his affidavit of documents by the end of November. The following day, the respondent requested receipt of the appellant’s affidavit of documents by November 30, 2017, failing which it would apply to compel the appellant’s compliance.

The appellant did not provide his affidavit by November 30, 2017, and, as a result, the respondent applied to the Court of Queen’s Bench to compel production of the affidavit by January 4, 2018. [ 5 ] On December 14, 2017, the appellant contacted the respondent and requested an extension of time to file his affidavit of documents. The parties negotiated the following agreement [Contract]: (

a) the respondent would withdraw its application to compel production; (

b) the time for the appellant to serve his affidavit of documents would be extended to January 31, 2018; (

c) the appellant would provide his crop insurance records; and (

d) the appellant’s statement of defence and counterclaim would be struck if the affidavit was not served by January 31, 2018. [ 6 ] The Contract was formalized in the Consent Order, which reads as follows: The Court orders: 1. The Defendant, Terry Gustafson, shall serve his Affidavit of Documents on the Plaintiff on or before January 31, 2018. 2. The Defendant’s Affidavit of Documents shall include all documents related to his 2015 and 2016 crop years currently in the possession of Saskatchewan Crop Insurance Corporation (the “SCIC Documents”). 3.

Should the Defendant fail to serve his Affidavit of Documents (along with the SCIC Documents) on or before January 31, 2018, the Defendant’s Statement of Defence and Counterclaim shall be struck.

[ 7 ] The respondent withdrew its application, but the appellant failed to serve his affidavit of documents by January 31, 2018. On February 1, 2018, the respondent applied for an order striking the appellant’s statement of defence and counterclaim. On February 12, 2018, the appellant served his affidavit of documents on the respondent and applied pursuant to Rule 13-7 of The Queen’s Bench Rules to extend the time for service nunc pro tunc to February 12, 2018. The Chambers judge heard the appellant’s and respondent’s applications together and disposed of both in the Chambers Decision . III.

THE CHAMBERS DECISION [ 8 ] In Chambers, as on this appeal, the appellant argued that the Chambers judge had a broad discretion pursuant to Subrules 13- 7(2) and (3) to extend the January 31 deadline fixed by the Consent Order, and that he should exercise that discretion in favour of the appellant. Subrules 13-7(2) and (3) provide as follows: 13-7

(2) The Court may enlarge or abridge the time appointed by these rules or fixed by any order for doing any act or taking any proceeding, on any terms that the Court considers just.

(3) The Court may order an enlargement of time notwithstanding that the application is not made until after the expiration of the time appointed or allowed. [ 9 ] The Chambers judge agreed he had the discretion to amend the Consent Order pursuant this Rule but found that discretion was limited.

In his view, the Consent Order, like any consent order, is—as Schwann J. (as she then was) said in Procyshyn v Gabruch , 2014 SKQB 349 , [2015] 5 WWR 320 [ Procyshyn ]—“a formal expression of an agreement between the parties” (at para 28), which may only be varied or set aside “on grounds which would otherwise vitiate a contract, i.e. common mistake, fraud, collusion, misrepresentation, duress or illegality, or where there was a ‘slip’ in drawing up the order” (at para 31).

The Chambers judge noted the reasoning in Procyshyn was adopted in Arslan v Sekerbank T.A.S. , 2016 SKCA 77 , [2016] 10 WWR 232, at paragraph 97 [ Sekerbank ], and in Wall Estate v Glaxosmithkline Inc , 2017 SKQB 149 , at paragraph 13 [ Wall Estate ]. He rejected the appellant’s argument that Procyshyn , Sekerbank and Wall Estate are distinguishable on their facts. [ 10 ] The appellant had also argued in the alternative that the Consent Order was vitiated as a result of illegality, frustration or duress, thereby enabling the Chambers judge to exercise his discretion.

The Chambers judge rejected each of those arguments. He found the Consent Order did not illegally oust the court’s jurisdiction to govern its own process or fetter the court’s jurisdiction, as the court retained the discretion to vary in accordance with the common law principles relating to the variation of consent orders. [ 11 ] As to frustration—a doctrine which was not referred to in Procyshyn —the appellant had put forward a number of reasons for his failure to serve his affidavit by January 31.

He noted the demands of harvest in the fall, and that he had underestimated the time he would need to collect his documents. He said there were delays by his bank and his suppliers in producing records. He had an appointment to execute his affidavit of documents on January 26, which his counsel cancelled to attend his grandmother’s funeral. The appellant made a second appointment to execute his affidavit on January 31, but failed to attend because a lawyer acting for him on a Provincial Court matter told him he had to attend Provincial Court that day or risk losing his licence.

He attended at Provincial Court and got an out of office message when he called his counsel on this action after his attendance. There was no evidence he made further calls that day. The Chambers judge concluded that these circumstances did not meet the legal test for frustration. [ 12 ] Finally, the Chambers judge found that the appellant was under stress, but there was no credible evidence that he acted under duress. IV.

Jurisdiction and Standard of Review [ 13 ] The parties agree the appellant has the right to appeal the Chambers Decision pursuant to s. 7(2) of The Court of Appeal Act, 2000 , SS 2000, c C-42.1 [ Act ], and that the basis of this Court’s jurisdiction to hear the appeal is s. 10 of the Act . [ 14 ] The Chambers judge was primarily concerned with whether he should exercise the authority conferred on him by Rule 13-7 of The Queen’s Bench Rules to amend the Consent Order by extending the time for service of the affidavit of documents.

It is uncontroverted that decision was discretionary, and that as such, the deferential standard of review relating to appeals from discretionary orders set out by this Court in Rimmer v Adshead , 2002 SKCA 12 , [2002] 4 WWR 119 [ Adshead ] applies: [58] In turning to this issue, it is necessary to bear in mind that the powers in issue are discretionary and therefore fall to be exercised as the judge vested with them thinks fit, having regard for such criteria as bear upon their proper exercise. The discretion is that of the judge of first instance, not ours.

Hence, our function, at least at the outset, is one of review only: review to determine if, in light of such criteria, the judge abused his or her discretion. Did the judge err in principle, disregard a material matter of fact, or fail to act judicially? Only if some such failing is present are we free to override the decision of the judge and do as we think fit.

Either that, or the result must be so plainly wrong as to amount to an injustice and invite intervention on that basis. [ 15 ] The appellant has alleged the Chambers judge did not correctly identify the law which governs the exercise of the discretion granted by Subrules 13-7(2) and (3). This would constitute an error of law, and the standard of review relating to errors of law is correctness: Houk v Daniels Investments Saskatoon Ltd. , 2016 SKCA 147 at para 10 , 5 CPC (8th) 272, 2055190 Ontario Ltd v Zhao , 2018 SKCA 66 at para 76 , [2019] 12 WWR 401.

The appellant has also alleged the Chambers judge erred in fact, and in applying the legal test for frustration to the facts, which raises a question of mixed fact and law. Both of those alleged errors are reviewable on a palpable and overriding error standard: see Saskatchewan Crop Insurance Corporation v McVeigh, 2018 SKCA 76 , at para 27 , 428 DLR (4th) 122. V. Issues

[16] The appellant raises the following issues: (

a) Did the Chambers judge err in law by incorrectly identifying the law governing the exercise of his discretion pursuant toSubrules 13-7(2) and (3) of The Queen’s Bench Rules? (

b) Did the Chambers judge err in law in failing to find the Consent Order was vitiated by reason of illegality? (

c) Did the Chambers judge err in law or disregard material facts in failing to find the Consent Order was vitiated by frustration? VI. Analysis A. Did the Chambers judge err in law by incorrectly identifying the lawgoverning the exercise of his discretion pursuant to Subrules 13-7(2) and (3) of TheQueen’s Bench Rules? [17] The appellant submits the Chambers judge erred when he found that his discretion to vary a consent order pursuant to Subrules13-7(2) and (3) could be exercised only on grounds that would vitiate a contract.

He argues that justice is the overriding considerationwhere applications to extend time are concerned, regardless of whether the time limit is imposed by a consent order or otherwise. On thisbasis, the appellant submits he should be granted relief, as he has offered cogent reasons for his failure to meet the deadline and therespondent has not suffered any prejudice as result of the brief 12-day delay in the service of the affidavit.

The appellant frames all of thisas a matter of fairness and access to justice. [18] In this context, the appellant relies heavily on Coulthard v Coulthard (1952), (SK CA), 5 WWR (NS) 662(Sask CA) [Coulthard]. In Coulthard, an action for divorce was commenced and was undefended. To set the matter for trial, the plaintiffwas obliged by the Rules of Court to give notice of trial to the defendant and to file that notice. The notice of trial was given, and thedefendant provided a written acknowledgment of the receipt of that notice and a consent to the action being set down for trial.

However,the notice of trial was not filed within the time specified by the Rules. The filing error was discovered at trial and, although the trial judgemade a decision and delivered reasons, he did not grant the divorce because the time requirement had not been met. [19] The plaintiff appealed on the basis that the trial judge should have granted an extension of time pursuant to a rule equivalent toRule 13-7. The three members of the panel agreed the appeal should be allowed, with each writing separate reasons.

Justice Proctercommented that “the courts exist for the purpose of making justice available to all our citizens at a minimum of cost and inconvenience”(at para 24). He noted that the defendant waived the requirements of the Rules and consented to the trial being set. Citing FenchurchExport Corporation v Sitka Spruce Lumber Company, (BC CA), [1947] 2 DLR 139 (WL) (BCCA), Procter J.A.explained that the “Rules of Court are the servants … of the Court”, and that judges “should interpret those Rules in the manner mostlikely to do justice between the parties” (at para 24).

In the result, he found the Rules permitted the court to allow the late filing and thatreasonable grounds had been shown to do so. [20] In his concurring reasons, Culliton J.A. (as he then was) also emphasized the interests of justice. Like Procter J.A., he relied ona rule substantially to the same effect as the current Rule 1-6, which provides as follows: 1-6(1) If a person contravenes or does not comply with these rules, or if there is an irregularity in a commencement document, pleading,affidavit, Form or other document, a party may apply to the Court: (

a) to cure the contravention, non-compliance or irregularity; or (

b) to set aside an application, proceeding or other thing because of prejudice to that party arising from the contravention, non-complianceor irregularity. [21] Justice Culliton described that rule as standing for the general principle that failure to comply with The Queen’s Bench Rulesdoes not necessarily void proceedings. He described the discretion of a chambers judge under the rule in broad terms: [43] This Rule gives to the court almost complete discretion to relieve against any irregularity in complying with the Rules of court.

In theexercise of this discretion the guiding principle must be to see that justice is done. [44] In disposing of matters of practice and procedure the court should keep in mind the statement of Armour, C.J. in Bank of Hamilton v.Baine (1888) 12 P.R. 439, at 442: Having regard to modern ideas and modern legislation in matters of practice and procedure, such rules must now be applied only in theinterest of and for the advancement of justice, and not in support of ancient technicality. … [46] The court, in relieving against an irregularity, or in exercising remedial discretion, is not bound by hard and fast rules or precedents,but may exercise its powers in the light of the facts and circumstances surrounding each particular case: Eggerson v.

Smith (1913), (SK KB), 5 W.W.R. 579, 6 Sask. L.R. 150, 26 W.L.R. 198; In Re Price (1912), (SK KB), 2 W.W.R. 394,5 Sask. L.R. 318, 21 W.L.R. 299. [22] Two points bear emphasis in relation to this reasoning. First, Culliton J.A.’s comments as to the existence of an “almostcomplete discretion to relieve against any irregularity” related to matters within the scope of a predecessor to Rule 1-6. This is not such anapplication. The appellant does not seek relief in relation to a contravention of or failure to comply with The Queen’s Bench Rules. Heseeks to vary a consent order, which is a very different matter.

Coulthard does not stand for the proposition that a Chambers judge always

has almost complete discretion to extend a time limit, in the interests of justice, regardless of the context or the nature or source of the timelimit. [23] Second, the approach to interpreting The Queen’s Bench Rules reflected in Procter J.A.’s reasons remains valid. As OttenbreitJ.A. put the matter in MFI AG Services Ltd. v Sotkowy, 2014 SKCA 69, 438 Sask R 289: [10] …the

interpretation of the Rules is informed by several key principles. In Coulthard v. Coulthard (1952), (SK CA),5 W.W.R. (N.S.) 662 (Sask. C.A.), at p. 669, this Court indicated that the “Rules of Court are the servants ... of the Court, whose faculty itis to interpret those Rules in the manner most likely to do justice between the parties ...”. As well, the Rules, because they are technically aregulation by virtue of s. 2 of The

Interpretation Act, 1995, S.S. 1995, c. I-11.2, stand to be interpreted as being remedial and to bestensure the attainment of their objects in accordance with s. 10 of that Act. Additionally, they must be interpreted in accordance with themodern approach to statutory

interpretation appearing in Rizzo & Rizzo Shoes Ltd., Re, (SCC), [1998] 1 S.C.R.27 (S.C.C.), which requires that the words of every enactment are to be read in their entire context and in their grammatical and ordinarysense harmoniously with the scheme and purpose of the enactment and the intention of the Legislature (in this case the drafters ofthe Rules). [24] However, these principles of

interpretation do not mean The Queen’s Bench Rules either change the substantive law, or grant aChambers judge the discretion to ignore the substantive law in what he or she perceives to be the interests of justice. That principle wasrecently affirmed in Hunter v McCorriston, 2016 SKCA 144, 86 RFL (7th) 260 [Hunter]. In Hunter, the respondent had failed to make aclaim for equal division of family property at the appropriate time as determined under The Family Property Act, SS 1997, c F-6.3. TheChambers judge, relying on Rule 1-6, nonetheless allowed the respondent’s application to advance that claim.

On appeal, this Court foundthe Chambers judges did not have the authority to do so, as the right to file a claim for division of property was not a procedural rule, but amatter of substantive law. Justice Caldwell explained the relationship between The Queen’s Bench Rules and the substantive law, asfollows: [39] Rule 1-6 of The Queen’s Bench Rules is the successor to what was familiarly called the “slip rule” under the old Queen’s Bench Rules[Old Rule 5]. While the rule was drafted in broad terms, judicial

interpretation of Old Rule 5 had limited its application to curing“procedural defects” only; its application did not extend to curing non-compliance with or contravention of substantive or statutory laws.The language used in Rule 1-6 does not suggest a more expansive scope than had Old Rule 5. In fact, the new rule is more prescriptive inits language than the old rule: [Old Rule 5 omitted]. … [45] The judicial

interpretation of Old Rule 5 is consistent with the inherent limitations of the rule-making powers of the Court of Queen’sBench.

Section 28 of The Queen’s Bench Act, 1998, SS 1998, c Q-1.01, sets out the court’s statutory rule-making power. It provides thatthe judges of that court may make rules regulating or respecting a number of procedural considerations and evidentiary matters and “anyother thing that the judges consider expedient for better attaining the ends of justice, advancing the remedies of parties and carrying intoeffect this Act and the provisions of other Acts respecting the court.” The Court of Queen’s Bench also exercises a residual inherentcommon law jurisdiction to make rules for the proper administration of justice.

However, neither power may be used to alter substantivelaw, other than as may be expressly provided in The Queen’s Bench Act, 1998 or other statute. [25] In the result, Caldwell J.A. concluded as follows: [48] To bring this to a close, an

interpretation of Rule 1-6 as empowering a judge to cure only procedural errors arising under The Queen’sBench Rules is consistent with the case law and the limits of the statutory and inherent rule making powers of the Court of Queen’s Bench.Moreover, like MacPherson C.J.Q.B., I conclude there is simply no sound basis in law to adopt an

interpretation of the slip rule that wouldexpand its breadth to permit the Court of Queen’s Bench to alter substantive or statutory laws. Finally, a judge may not apply Rule 1-6 soas to give the rule a scope that is ultra vires the rule-making powers of the Court of Queen’s Bench.

It would be an error of law to do so. [26] These fundamental limitations on the rule-making authority of the Court of Queen’s Bench, and the power of a judge applyingthose rules, are engaged in this case: see Egware v Regina, 2016 SKQB 388, 95 CPC (7th) 174, at para 31, where Schwann J. (as she thenwas), citing Hunter, confirmed the application of this principle to Subrule 13-7(2). More specifically, the principle adopted in Procyshyn,Sekerbank, and Wall Estate reflects the fact that the substantive law—in this case the law of contract—is not altered by Subrule 13-7(2)and (3) of The Queen’s Bench Rules.

The Contract provided that the appellant’s statement of defence and counterclaim would be struck ifthe affidavit of documents was not filed by January 31. The Consent Order implemented that agreement.

The appellant, having receivedthe consideration for which he bargained—that the respondent’s application would be withdrawn and the time to serve extended toJanuary 31, 2018—sought to resile from that fully performed contract by seeking relief from that bargain. [27] The question, then, is whether the Chambers judge correctly identified the substantive law—that is, the law of contract—whichlimited the exercise of his discretion.

Procyshyn and Wall Estate adopted the reasoning in R v Gray (2004), (NB CA),284 NBR (2d) 31 (CA) [Gray], which had been adopted in Elmtree Environmental Ltd. v Fredericton (Region) Solid Waste Commission,2011 NBQB 108, at para 15, 377 NBR (2d) 71 [Elmtree], with one difference. In Gray, Robertson J.A. said a consent order could be setaside only on grounds that would vitiate a contract, and referred to common mistake, fraud, collusion, misrepresentation, duress andillegality as examples of such grounds.

Procyshyn and Wall Estate, on the other hand, say that one of these six listed grounds must bepresent, absent a slip in drawing the order.

The Chambers judge adopted the same approach, stating that he had the discretion to vary theConsent Order “only in those instances where there is proof of a common mistake, fraud, collusion, misrepresentation, duress or illegality,or where there has been a ‘slip’ in drawing the order” (Chambers Decision at para 22). [28] In Sekerbank, Caldwell J.A. adopted a less restrictive approach, stating the test this way: [97] …I agree with the analysis in Elmtree, where the court had faced arguments similar to those advanced by the appellants in this caseand concluded that it could not terminate a consent order absent proof of grounds that would vitiate a contract — i.e., fraud, commonmistake, or illegality, etc. — or of a material change in circumstances.

This conclusion is supported by the decisionsin Spender and Ontario Sugar Co., Re cited by the Chambers judge and by the recent decisions in Procyshyn v. Gabruch, 2014 SKQB

349(Sask. Q.B.) at paras 28-29, (2014), [2015] 5 W.W.R. 320 (Sask. Q.B.), Yan v. Chen, 2014 ONSC 3111 (Ont. S.C.J. [CommercialList]) at paras 83-85, as well as Simonelli v Ayron Developments Inc., 2010 ABQB 565, [2011] 3 W.W.R. 140 (Alta. Q.B.) at paras 64-87,and in Kolodziejski v. Kolodziejski (May 20, 2016), Doc. Saskatoon CACV 2813 (Sask. Q.B.). (Emphasis added) [29] This language recognizes that there are circumstances in which a consent order could be varied or set aside which do notconstitute common mistake, fraud, collusion, misrepresentation, duress or illegality.

However, it does not mean a court can vary a consentorder if there has been a “material change of circumstances” which would be insufficient to either vitiate the underlying contract or justifynon-performance based on the law of contract. [30] We note four examples—which are not meant to be exhaustive—of grounds that might justify variation of a consent order thatdo not appear in the six grounds listed in Elmtree. First, the Elmtree test does not refer to unconscionability, which, like the six listedgrounds, may also result in a contract being set aside.

Second, as Sekerbank demonstrates, the consent order at issue---in Sekerbank, apreservation order that served substantially the same function as a Mareva injunction—may be based on an implicit or explicit agreementthat certain conditions exist or will continue to exist. If that is so, a consent order may be subject to variation if those conditions no longerexist. In contractual terms, that could be properly characterized as

interpretation of the contract and consent order, based on the nature ofthe order and the surrounding circumstances. Third, the doctrine of frustration—which relates to performance rather than the formation ofthe contract—may also be engaged, as the appellant claims in this case. Fourth, consent orders relating to custody and parenting ofchildren and for child or spousal support are subject to variation in certain circumstances, as a matter of substantive law. [31] In the result, the test adopted by the Chambers judge as to the extent of his discretion was, while essentially correct, not entirelycomplete.

His discretion was not limited to the specific grounds to vitiate a contract listed in Elmtree. He was entitled to exercise hisdiscretion to vary the Consent Order if there were grounds which would vitiate or excuse performance of the Contract. Indeed, the factthat he did not reject the claim of frustration out of hand demonstrates that he recognized that fact. [32] The appellant submits that the cases which adopt this contract-based test are distinguishable on their facts. With respect, wedisagree.

This test is based on principles relating to the relationship between The Queen’s Bench Rules and substantive law which havebroad and general application and applies to both interim and final orders. [33] For these reasons, the Chambers judge did not, as suggested by the appellant, have a broad discretion to grant the relief soughtif he concluded it was fair or in the interests of justice to do so.

In this context, it bears emphasizing that if the appellant had been correctas to the test for variation, the existence of the fully executed Contract which was implemented by the Consent Order would have weighedvery heavily in the analysis in any event. In our view, the bottom line decision by the Chambers judge is both fair and just. [34] Accordingly, the question that remains is whether grounds exist that would vitiate or excuse performance of the contractreflected in the Consent Order. The grounds identified by the appellant are illegality and frustration. We will now turn to those grounds. B.

Did the Chambers judge err in failing to find the Consent Order wasvitiated by reason of illegality? [35] The appellant submits the Consent Order amounts to contracting out of s. 28 of The Queen’s Bench Act, 1998, SS 1998, c Q-1.01 [The Queen’s Bench Act], which grants the authority for judges of the Court of Queen’s Bench to make The Queen’s Bench Rules, aswell as contracting out of The Queen’s Bench Rules themselves.

He says The Queen’s Bench Act and The Queen’s Bench Rules protect thepublic interest in the litigation process and facilitate just resolutions to disputes, and that a party cannot contract out of a statutoryprovision designed to protect the public interest. He relies on Potash v Royal Trust Co., (SCC), [1986] 2 SCR 351[Potash], at paragraphs 39–40, in support of this proposition. [36] In Potash, the Court applied what it summarily described as “the long standing principle that parties cannot contract out ofstatutory provisions enacted in the public interest” (at para 37).

The statutory provisions there at issue were s. 10(1) of the Interest Act,RSC 1970, c I-18 and s. 20(6) of The Mortgage Act, RSM 1970, c M200, both of which provided that a mortgagor could prepay amortgage with a term greater than five years by paying principal, interest and three months interest. Mr. Potash submitted that theprovision was designed for the protection of the public, noting that any member of the public might need its protection when theyborrowed against mortgage security.

He argued that “to permit contracting out would defeat the whole purpose of a legislative provisionenacted in the public interest” (at para 39). Justice Wilson, without further explanation, disposed of the issue as follows: [40] I agree with counsel for Potash that s. 10(1) was enacted in the public interest and that the long standing rule against contracting outor waiver should apply to it.… [37] The nature of this “long standing principle” was explored at greater length in Ontario Human Rights Commission v Etobicoke, (SCC), [1982] 1 SCR 202, at 213–214 [Etobicoke].

In that case, the Court was concerned with a provision in The OntarioHuman Rights Code, RSO 1970, c 318, that prohibited discrimination on the basis of age, unless age was a bona fide occupationalrequirement. The employer argued that a mandatory retirement clause in a collective agreement must be considered such a bona fiderequirement, absent evidence to the contrary.

Justice McIntyre, writing for the Court, responded to that argument as follows (at 213-214): While this submission is that the condition, being in a collective agreement, should be considered a bona fide occupational qualificationand requirement, in my opinion to give it effect would be to permit the parties to contract out of the provisions of The Ontario HumanRights Code.

Although the Code contains no explicit restriction on such contracting out, it is nevertheless a public statute and it constitutes public policy in Ontario as appears from a reading of the Statute itself and as declared in the

preamble. It is clear from the authorities, both in Canada and in England, that parties are not competent to contract themselves out of the provisions of such enactments and that contracts having such effect are void, as contrary to public policy. In Halsbury’s Laws of England, 3rd ed., vol. 36, p. 444, para. 673, the following appears: 673. Waiver of statutory rights.

Individuals for whose benefit statutory duties have been imposed may by contract waive their right to the performance of those duties, unless to do so would be contrary to public policy or to the provisions or general policy of the statute imposing the particular duty or the duties are imposed in the public interest. And in the fourth edition of the same work the following is to be found in vol. 9, p. 289, para. 421: 421. Contracting out. As a general rule, any person can enter into a binding contract to waive the benefits conferred on him by

an Act of Parliament, or, as it is said, can contract himself out of the Act , unless it can be shown that it would be contrary to public policy to allow such an agreement . Statutory conditions may, however, be imposed in such terms that they cannot be waived by agreement; and, in certain circumstances, it is expressly provided that any such agreement shall be void.

By way of example of an exception to the general rule, an agreement between an employer and employee whereby the latter agrees to waive a statutory duty imposed on the former in the interests of safety is generally not binding on the employee. … The Ontario Human Rights Code has been enacted by the Legislature of the Province of Ontario for the benefit of the community at large and of its individual members and clearly falls within that category of enactment which may not be waived or varied by private contract; therefore this argument cannot receive effect. (Emphasis added) [ 38 ] This analysis demonstrates that the issue is not simply whether the legislation at issue was passed “in the public interest”.

In the broad sense, all legislation is passed in what legislators believe to be the public interest. Nonetheless, as a general rule, a person can contract to waive benefits conferred by legislation. He or she cannot do so only if it would be contrary to public policy or contrary to the provisions or general policy of the legislation. [ 39 ] In Potash , the public policy purpose of the legislation was creditor and consumer protection, which would relate primarily to prospective mortgagors dealing with institutional lenders.

If institutional lenders could require a waiver of that protection as a condition of lending, that purpose would be undermined. Similarly, permitting employers and employees to contract out of the human rights legislation at issue in Etobicoke —being the recognition and protection of human rights “for the benefit of the community at large and its individual members”—would be inconsistent with that purpose, and thus contrary to public policy.

In Dunn v Malone (1903), 6 OLR 484 at para 15 (QL) (Div Ct) , the court held a borrower and lender could not contract out of a provision of the Interest Act requiring disclosure of the rate per annum.

The court found the provision was passed in the public interest for the protection of borrowers, and commented that if waivers were permitted, the Act “would speedily become a dead letter”. [ 40 ] These cases reflect the fact that the contracting out principle applies only if the legislation at issue has a certain sort of public policy purpose, and then only if permitting the waiver or contracting out would be inconsistent with or undermine that purpose. The principle has limited application. The “general rule” that contracting out is permitted referred to in Etobicoke reflects that fact.

In Fleming v Massey , 2016 ONCA 70 , 394 DLR (4th) 647, the court found that employers and workers could not contract out of provisions of The Workplace Safety and Insurance Act, 1997 , SO 1997, c 16, Sched A , which provided that uninsured workers could sue their employers for workplace accidents in defined circumstances, including employer negligence. Justice Juriansz summarized the court’s reasons for that conclusion, as follows: [34] I recognize that the courts should exercise extreme caution in interfering with the freedom to contract on the grounds of public policy.

Considering the sweeping overriding of the common law made by workers’ compensation legislation and the broad protection it is designed to provide to workers in the public interest, it would be contrary to public policy to allow employers and workers to contract out of its regime, absent some contrary legislative indication. (Emphasis added) [ 41 ] Here, the appellant submits that the Consent Order allowed the respondent to contract out of The Queen’s Bench Act and The Queen’s Bench Rules . In our view, that overstates the issue.

The issue is not whether the parties could contract out of The Queen’s Bench Act or The Queen’s Bench Rules as a whole. It is whether the Contract—which provided that the statement of defence and counterclaim shall be struck if the affidavit of documents was not served by January 31, 2018—was contrary to public policy. [ 42 ] In our view, it was not, for the following reasons. [ 43 ] First, Subrules 13-7(2) and (3), whether considered alone or in the context of The Queen’s Bench Rules as a whole, are not legislation of the kind that engages the contracting out principle at all.

The public policy purpose of The Queen’s Bench Rules is specified in Rule 1-3: 1-3

(1) The purpose of these rules is to provide a means by which claims can be justly resolved in or by a court process in a timely and cost effective way. [ 44 ] Those who have a legal dispute are not obliged to choose this dispute settlement mechanism. They may negotiate the resolution of their dispute, with or without a mediator. They may agree to arbitrate or to litigate in another jurisdiction. They are not, by doing so, waiving or contracting out of a benefit of the kind at issue in Etobicoke .

It may be contrary to public policy to waive or contract out of the right to assert certain statutory rights in the Court of Queen’s Bench. However, the problem would not arise because a party waived the right to file a statement of claim or defence, but because it was contrary to public policy to waive or contract out of the ability to assert the statutory right.

[ 45 ] Just as potential litigants can choose to go another route entirely, those who choose to pursue a claim in the Court of Queen’s Bench are entitled to do so in the manner permitted by The Queen’s Bench Rules . They are, to the extent and in the manner contemplated by The Queen’s Bench Rules and permitted by the court, entitled to make agreements as to how they will conduct an action. They may commence an action and agree to settle on terms to be incorporated in a consent order, which may include a release of all actions and causes of action. They may agree to forego access to the full litigation menu, and, if the court agrees, deal with their dispute by stating an issue or applying for

summary judgment. [ 46 ] They may also agree to take a certain position in response to an application by another party. In particular, they may agree to a consent order under a procedural rule such as Rule 13-7, including a consent order that has consequences for a failure to comply.

Again, they are not, by doing so, waiving or contracting out of a benefit provided by legislation with the kind of public policy purpose at issue in cases such as Etobicoke . [ 47 ] Second, even if the right to apply under Subrule 13-7(2) could be characterized as a legislation that engages the contracting out principle, the contracting out issue does not arise on these facts. The Consent Order enlarged the time appointed by the Rules to serve the affidavit of documents. As such, it constituted the exercise by a Queen’s Bench judge of his discretion pursuant to Subrule 13-7(2), on terms he considered just.

The parties did not contract out of Subrule 13-7(2). To the contrary, they agreed to and received the “benefit” of a judge considering and granting an application for the Consent Order pursuant to that Subrule. The appellant received the benefit of an enlargement of the time provided to serve his affidavit of documents and avoided legal costs related to preparing for Court to deal with the respondent’s action.

The respondent received the benefit of a hard deadline. [ 48 ] Third, if the Chambers judge had the jurisdiction to grant the Consent Order—which, in our view, he did—the parties were entitled to agree that such an order should be granted. It cannot be contrary to public policy for parties to an action to agree that a judge will make an order that he or she has the jurisdiction to make pursuant to The Queen’s Bench Rules . Orders fixing deadlines and orders striking pleadings are granted as a matter of course. Where the issue is a failure to disclose documents, Rule 5-14 applies: 5-14

(1) In this rule, “party in non-compliance” means a party who neglects or refuses: (

a) to serve an affidavit of documents in accordance with this subdivision; (

b) to produce for inspection any document for which notice to produce documents for inspection has been given; or (

c) to comply with any order for production or inspection pursuant to rule 5-12.

(2) A party in non-compliance is liable: (

a) if the party is a plaintiff, to have the party’s action dismissed; or (

b) if the party is a defendant, to have the party’s defence, if any, struck out and to be placed in the same position as if the party had not defended. [ 49 ] Orders of this kind do not deny access to justice or the benefit of The Queen’s Bench Rules . They are part and parcel of providing a means to resolve disputes in a timely and cost-effective manner pursuant to The Queen’s Bench Rules , which is an essential element of access to justice. [ 50 ] The appellant relies on Sigfusson Northern Ltd. v Signal Energy LLC , 2016 SKQB 46 , 88 CPC (7th) 416.

In that case, Elson J. refused to make an order in this form, which, as he notes, is sometimes referred to as a “drop dead” order. He explained his reasons for doing so, as follows: [14] In my view, such an order is questionable, if not outright improper. In effect, the ‘drop dead’ order purports to do away with, or fetter, the court’s discretion, at a future time, to consider all circumstances related to the alleged or demonstrated non-compliance, including those circumstances which might arguably excuse non-compliance.

While the court obviously expects its orders to be observed, it should not anticipate non-compliance by attaching an automatic and potentially prejudicial consequence to it. This is not to say that non- complying parties will not bear the burden of presenting strong and compelling evidence to excuse their failure. Clearly, they will. That said, the court should not, before the fact, deny them the opportunity to present such evidence.

See also Lussier v Meabry , 2018 SKQB 302 , at paragraphs 26–29 , 18 RFL (8th) 159, where the court cited these comments with approval. [ 51 ] With the greatest respect, we are of a different view. The Consent Order does not purport to fetter the discretion of the court at a future time. It does not tell another judge what to do. It provides that the statement of defence and counterclaim “shall be struck”.

Although the respondent chose to apply for a further order, that application was not necessary. [ 52 ] As a matter of practice, Chambers judges may be reluctant to make drop dead orders, regardless of whether they are by consent. However, practice is one thing, and jurisdiction is another. Judges have the discretion to make such orders under Subrule 13-7(2) in appropriate circumstances. Indeed, it would be an error for a judge to conclude that the court has no discretion to make such an order, regardless of the circumstances.

Further, judges may often find that the consent of the parties is a very important consideration in deciding whether to do so. [ 53 ] For these reasons, this ground of appeal must fail. C. Did the Chambers judge err in law or disregard material facts in failing to find the Consent Order was vitiated by frustration? [ 54 ] The appellant argues the Chambers judge erred in his analysis of whether the doctrine of frustration operated to vitiate the Consent Order. He acknowledges the Chambers judge found frustration did not apply because of the appellant’s lack of diligence in

discharging his duties under the Consent Order, but says the Chambers judge failed to identify the evidence relied upon in support of hisfinding of no diligence. The appellant submits that this is a reversible error of fact. [55] The standard of review that applies to an alleged error of fact is palpable and overriding error. The evidence was sufficient tosupport the conclusion that the appellant and his counsel were not sufficiently diligent.

If this ground of appeal constitutes an allegationthat the Chambers judge erred in fact by failing to correctly weigh the appellant’s exculpatory evidence, it fails on the basis of thestandard of review. [56] Although the appellant characterizes this alleged error as an error of fact, it is properly characterized as alleging that theChambers judge erred in principle by disregarding material facts.

With respect, we do not agree the Chambers judge made such an error.The Chambers judge specifically referred to the facts on which the appellant relies as justification for his failure to meet the January 31deadline in that portion of his decision dealing with frustration. He did not list every item of evidence, but was not required to do so.

Anappellate court must presume the judge has reviewed all of the evidence, unless an omission gives rise to a reasoned belief the judge hasforgotten, ignored, or misconceived the evidence in a way that affected the judge’s conclusion: see Hilmoe v Hilmoe, 2018 SKCA 92 atpara 35, [2019] 1 WWR 118 [Hilmoe] (leave to appeal to the SCC dismissed, ). [57] The appellant also contends the Chambers judge erred in his application of the legal test for frustration.

The parties agree theChambers judge correctly identified the governing authorities to be Naylor Group Inc. v Ellis-Don Construction Ltd., 2001 SCC 58,[2001] 2 SCR 943, and PS International Canada Corp. (Seaboard Specialty Grains and Foods) v Palimar Farms Inc., 2017 SKCA 78,[2018] 2 WWR 90 [Palimar Farms]. In Palimar Farms, this Court said of frustration: [38] The essential features of the doctrine of frustration are not in dispute.

They were explained as follows in Naylor Group Inc. v Ellis-Don Construction Ltd., 2001 SCC 58 at para 53, [2001] 2 SCR 943: [53] Frustration occurs when a situation has arisen for which the parties made no provision in the contract and performance of the contractbecomes “a thing radically different from that which was undertaken by the contract”: Peter Kiewit Sons’ Co. v. Eakins Construction Ltd, (SCC), [1960] S.C.R. 361, per Judson J., at p. 368, quoting Davis Contractors Ltd. v.

Fareham Urban District Council,[1956] A.C. 696 (H.L.), at p. 729. [58] The appellant submits, based on this test, that the Chambers judge erred by failing to find that the performance of the Contractbecame a radically different thing. He says that is so because preparation, execution and service of the affidavit became very difficult dueto intervening events that were not contemplated or foreseen. The appellant alleges that failing to take this into account was an error oflaw.

However, as noted above, this is an allegation that the Chambers judge erred in relation to a mixed question of fact and law,reviewable on a palpable and overriding error standard. [59] Frustration may arise as a result of physical impossibility or impossibility resulting from supervening illegality: ACTGreenwood Ltd. v Desjardins-McLeod, 2019 ONCA 158 at para 17 [ACT Greenwood]; Angela Swan, Jakub Adamski & Annie Y. Na,Canadian Contract Law, 4th ed (Toronto: LexisNexis, 2018) at 885.

It may also arise where performance is physically and legallypossible but would nonetheless be totally different from what the parties intended (ACT Greenwood at para 17). The Chambers judgeconcluded that the evidence did not support the contention that by virtue of a supervening event, performance of the contract becameradically different than what was agreed to, was rendered impossible or was something the parties failed to contemplate. [60] In our view, that conclusion was available on the evidence. Performance was not physically or legally impossible.

The eventsthat resulted in the failure to serve the documents were not the result of supervening events beyond the control of the appellant and hiscounsel, or beyond the contemplation of the parties. The appellant overcame the delays caused by third parties in obtaining documents. Inthe final analysis, the affidavit was not served because appellant’s counsel, and then the appellant, chose not to attend two scheduledmeetings that would have resulted in the execution and delivery of his affidavit. They gave priority to other matters and, as the deadlineloomed, the appellant both failed to manage his

schedule and failed make the arrangements necessary to meet the deadline. [61] In these circumstances, the Chambers judge’s conclusion that the test for frustration was not met was not a palpable andoverriding error. In the result, this ground of appeal also fails. VII. Conclusion [62] For the foregoing reasons, the appeal is dismissed with costs to the respondent. “Whitmore J.A.” Whitmore J.A. “Whitmore J.A.”ForRyan-Froslie J.A. “Barrington-Foote J.A.” Barrington-Foote J.A. Court of Appeal for Saskatchewan Neutral Citation: 2019 SKCA 68 Corrigendum Date: 2019-12-05Terry Gustafson Appellant (Defendant)AndFuture Four Agro Inc. Respondent (Plaintiff)

Corrigendum The text of the judgment has been corrected from its original 30 July 2019 release date to reflect the following: in paragraph 26, the words “ought to resile” should have read “sought to resile”. Paragraph 26 was amended on 5 December 2019 to reflect this correction.