Farm Credit Canada v Gustafson, 2021 SKCA 38

Court of Appeal for Saskatchewan Docket: CACV3403 Citation: Farm Credit Canada v Gustafson , 2021 SKCA 38 Date: 2021-03-11 Between: Farm Credit Canada Appellant (Respondent) And Terry Blaine Gustafson Respondent (Applicant) And Input Capital Corp., Robert Andjelic, Laverne Westman, Thelma Westman, TS Farm Ltd., Ministry of Justice, and South Country Equipment Ltd. Non-Parties (Respondents) Before: Richards C.J.S., Jackson and Schwann JJ.A.

Disposition: Appeal allowed in part Written reasons by: The Honourable Madam Justice Jackson In concurrence: The Honourable Chief Justice Richards The Honourable Madam Justice Schwann On appeal from: QBG 1796 of 2018, Saskatoon Appeal heard: October 5, 2020 Counsel: Kevin Hoy for the Appellant Jay Watson for the Respondent Jackson J.A. I. Introduction [ 1 ] This appeal concerns the

interpretation of s. 70(2) (

a) of The Saskatchewan Farm Security Act , SS 1988-89, c S-17.1 [ Farm Security Act ], and of s. 94(8) of The Enforcement of Money Judgments Act , SS 2010, c E-9.22 [ Money Judgments Act ]. The Farm Security Act exempts from seizure and sale farm machinery and equipment “that are reasonably necessary for the proper and efficient conduct of the farmer’s agricultural operations for the next 12 months” (s. 66(d)), except when the goods are covered by a security agreement that creates a purchase-money security interest [PMSI] ( s. 70(2) (a)).

Subsection 94(8) of the Money Judgments Act describes when the surplus proceeds following the sale of an exempt asset are payable to the debtor. [ 2 ] The central issue linking these two Acts, and requiring them to be interpreted, is this: When a purchase-money secured creditor sells farm machinery and equipment that would otherwise be exempt as against other creditors, and the sale generates surplus proceeds, are those proceeds payable to the debtor or may they be claimed by those other creditors of the debtor?

Resolution of this issue requires the Court to settle the question of whether the exemption provisions of the Farm Security Act should be strictly construed. [ 3 ] In an unreported fiat, a judge of the Court of Queen’s Bench held that the surplus proceeds remaining after the PMSI creditor’s sale are exempt, and payable to the farmer, and are not claimable by other creditors.

She also ordered that the proceeds be paid to the farmer on the condition that he use them to reduce debt owing under other PMSIs secured by other farm equipment: Gustafson v Input Capital Corp. (25 March 2019) Saskatoon, QBG 1796 of 2018 (Sask QB) [ Chambers Decision ]. [ 4 ] For the reasons that follow, I would allow the appeal to this limited extent: I would remove the condition directing the farmer how to use the proceeds. In all other respects the appeal is dismissed. II.

Legislation [ 5 ] These reasons refer extensively to provisions from the Farm Security Act , the Money Judgments Act , The Personal Property Security Act, 1993 , SS 1993, c P-6.2 [ Personal Property Security Act ], and The Legislation Act , SS 2019, c L-10.2 . Only the principal legislative provisions are stated here, with key phrases emphasized. I will cite other provisions as they become relevant during the course of these reasons.

An appendix contains s. 66 of the Farm Security Act and s. 93 and s. 94 of the Money Judgments Act in their entirety. [ 6 ] The relevant provisions from the Farm Security Act are as follows: Exemptions under executions 66 The following property of a farmer and his or her family is declared free from seizure under judgment enforcement : … (

d) all livestock, farm machinery and equipment , including one automobile or one farm truck, that are reasonably necessary for the proper

and efficient conduct of the farmer’s agricultural operations for the next 12 months ; … (

j) the crop of the farmer to the extent that is sufficient, when converted into cash, along with any other means that he or she may have, to: (

i) pay all unpaid legitimate costs of harvesting the crop; (ii) provide a necessary living allowance for the support of the farmer and his or her family until the crop of the following year is about to be harvested; and (iii) provide necessary costs of his or her farming operations until that time; (j.1) money, and property or income acquired through the investment of money: (

i) that can be separately identified as being received or as having been received by the farmer pursuant to a legal entitlement to compensation for physical or mental injury; and (ii) that is being used or will be used to meet the reasonable and ordinary living expenses of the farmer and his or her dependants or to provide medical or other care facilities for the farmer or his or her dependants … . … Exemptions under security agreement 68

(1) Notwithstanding any Act or agreement, where a farmer executes a security agreement on any of the chattels mentioned in

section 66 , the farmer may hold free from seizure any of those chattels that are covered by the security agreement and that would be exempt pursuant to

section 66 from seizure. … Exceptions 70

(2) Except in the case of food, clothing and bedding of the farmer and the farmer’s family, this Part does not exempt from seizure and sale goods that are covered by : (

a) a security agreement that creates a purchase-money security interest as defined in The Personal Property Security Act, 1993 ; or (

b) a security agreement that describes a security interest described in subsection 34(11) or (12) of The Personal Property Security Act, 1993 . … Act prevails 110 If any provision of this Act or the regulations conflicts with any other Act, the regulations made pursuant to any other Act or the provisions of any contract, agreement, order or document, the provision of this Act or the regulations prevails. (Emphasis added) [ 7 ] The following is from the Money Judgments Act : Exempt property 93

(8) This

section does not apply to any judgment debtor who is a farmer as that term is defined in

Part V of The Saskatchewan Farm Security Act . … Proceeds of exempt property 94

(8) If exempt property of the judgment debtor that is subject to a security interest is sold by a person enforcing the security interest , and that security interest has priority over all enforcement charges affecting the exempt property, the sale proceeds shall be allocated in the following order : (

a) to the holder of the security interest to the extent of the sum secured and any costs to which that person is entitled; (

b) the balance remaining, if any, to the sheriff to be paid, subject to the rights of persons against whom exemptions may not be asserted pursuant to this Act: (

i) in the case of an item mentioned in clause 93(1)(

c) or (f), to the judgment debtor in an amount not exceeding an amount required to replace the property sold with an equivalent item of property; (ii) in the case of an item mentioned in clause 93(1)(l), to the judgment debtor in an amount sufficient to replace the item up to the prescribed amount;

(iii) in the case of an item mentioned in clause 93(1)(e), to the judgment debtor in an amount not exceeding the prescribed amount mentioned in clause 93(1)(e); and (iv) except as provided in subclauses (

i) to (iii), to the judgment debtor. … Conflict with any other Act 120

(1) In this section, “other Act” means

an Act providing for the enforcement of a judgment, including an order for child or spousal maintenance or support.

(2) If there is a conflict between any provision of this Act and any other Act, the other Act prevails over the provision of this Act . (Underline emphasis added) [ 8 ] The relevant provision from the Personal Property Security Act is as follows:

Interpretation 2

(1) In this Act: … (jj) “purchase-money security interest” means: (

i) a security interest taken in collateral, other than investment property, to the extent that it secures all or part of its purchase price ; (ii) a security interest taken in collateral, other than investment property, by a person who gives value for the purpose of enabling the debtor to acquire rights in the collateral, to the extent that the value is applied to acquire those rights … . (Emphasis added) [ 9 ]

Section 2 - 10 of The Legislation Act provides as follows: Acts and regulations remedial 2-10

(1) The words of

an Act and regulations authorized pursuant to

an Act are to be read in their entire context, and in their grammatical and ordinary sense, harmoniously with the scheme of the Act, the object of the Act and the intention of the Legislature .

(2) Every Act and regulation is to be construed as being remedial and is to be given the fair, large and liberal

interpretation that best ensures the attainment of its objects. III. Background [ 10 ] Terry Gustafson, a farmer, purchased two combines, including pickup platforms and a corn header [Farm Equipment] from a John Deere dealership according to a payment plan. To secure payment, Mr. Gustafson entered into three purchase-money security agreements with John Deere Financial Inc., dated September 18, 2012, September 19, 2012, and October 22, 2013. According to these agreements, John Deere Financial took a PMSI in the Farm Equipment, with the right to seize and sell that equipment in the event Mr.

Gustafson defaulted on his payments. John Deere Financial assigned the PMSIs to Nelson Motors & Equipment Partnership [Nelson Motors]. [ 11 ] In 2014, Farm Credit Canada [FCC] extended credit to Mr. Gustafson in the aggregate principal amount of $1,282,450. In exchange for this credit, on April 4, 2014, Mr. Gustafson granted FCC a security interest in all of his present and after-acquired personal property. Mr. Gustafson is currently in default of his payment obligations to FCC. FCC has commenced proceedings against Mr. Gustafson to obtain judgment against him (QB 106 of 2015). [ 12 ] Mr.

Gustafson defaulted on his security agreements with Nelson Motors. In due course, Nelson Motors seized and sold the Farm Equipment. After satisfying the terms of its security agreements, a surplus of $78,017.19 remained. Nelson Motors paid the surplus into court pursuant to s. 60(4) of the Personal Property Security Act [1] and notified Mr. Gustafson and all other potentially interested parties, including FCC, that it had done so. [ 13 ] Upon receipt of the notice from Nelson Motors, Mr.

Gustafson applied to the Court of Queen’s Bench under s. 66 of the Personal Property Security Act [2] for the following order: “Moneys paid into court to be paid out to the Applicant [Mr.

Gustafson] for the purposes of securing farm implements necessary for farming operations and therefore exempt from seizure under Saskatchewan law”. [ 14 ] FCC opposed the application and claimed the proceeds under its general security agreement, asserting in its affidavits that the amount in court “represents proceeds resulting from the sale of non-exempt equipment which was seized and sold by Nelson Motors & Equipment Partnership pursuant to a purchase-money security interest in such equipment” (emphasis added). IV.

Chambers Decision [ 15 ] The Chambers judge held that the Farm Equipment was exempt property under s. 66(

d) of the Farm Security Act as being

“machinery and equipment … that are reasonably necessary for the proper and efficient conduct of the farmer’s agricultural operations forthe next 12 months”. She also held that Mr. Gustafson is entitled to claim an exemption in the surplus proceeds. To arrive at thisconclusion, she reasoned by analogy from decisions pertaining to (

a) homestead exemptions – notably Investors Group Trust Co. v Eckhoff, 2008 SKCA 18, [2008] 9 WWR 306 [Eckhoff], andCharles v Hernandez Becerra, 2016 SKCA 163, 88 RFL (7th) 293 [Charles]; and (

b) insurance proceeds from the loss of personal property – notably Thomas v Royal Bank of Canada (1985), (SK KB), 20 DLR (4th) 471 (Sask QB) [Thomas], reversed on different grounds in Thomas v Royal Bank (1987), (SK CA), 56 Sask R 308 (CA). [16] Applying this law, she held that the surplus proceeds of sale are exempt, adding a proviso “that they are used to secureGustafson’s remaining farm equipment” (Chambers Decision at para 20). She added the proviso in response to Mr. Gustafson’s affidavitevidence. According to this evidence, Mr.

Gustafson had agreed with another purchase-money secured creditor that the proceeds would beused to prevent the seizure of other farm equipment. V. Parties’ Positions A. FCC [17] FCC submits that (a) s. 70(2)(

a) of the Farm Security Act provides that nothing in

Part V of the Farm Security Act exemptsfrom seizure goods that are secured by a PMSI, (

b) no portion of the Farm Security Act reserves to a farmer a seizure exemption oversurplus proceeds from the lawful sale of exempt personal property by a PMSI holder, and (

c) no provision of the Farm Security Actauthorizes the proceeds from the sale (either voluntary or forced) of equipment that is exempt from seizure by virtue of s. 70(2) to be usedto pay debts owing under security interests (PMSI or otherwise) in respect of other pieces of equipment. [18] According to FCC, the Supreme Court has made it clear that certain interpretive principles, which require courts to interpretparticular types of statutory provisions narrowly, remain operative in Canadian law.

For this proposition, FCC points to McDiarmidLumber Ltd. v God’s Lake First Nation, 2006 SCC 58, [2006] 2 SCR 846 [McDiarmid], and Heritage Capital Corporation v EquitableTrust Company, 2016 SCC 19, [2016] 1 SCR 306 [Heritage]. [19] To elaborate, FCC submits that statutory seizure exemptions, which derogate from creditors’ rights, should be interpretednarrowly.

FCC relies on a series of decisions from the Court of Queen’s Bench for this proposition: Re Hetherington Interpleader (1910),3 Sask LR 232 (SC) (in Chambers) at para 5 [Hetherington]; Canada v Smith (1983), (SK KB), 29 Sask R 30(QB) at para 12; Con-Agra Ltd. v Shivak, 2001 SKQB 35 at para 14, 202 Sask R 164 [Shivak]; and Dolter v Input Capital Corp., 2019SKQB 118 at para 15 [Dolter]. [20] On the question of whether an exemption extends to proceeds at all, FCC submits that none of the authorities to which theChambers judge referred are on-point.

FCC analyzes each of Eckhoff, Charles and Thomas and asserts they do not stand for theproposition that surplus proceeds arising from the sale of an asset described in s. 70(2)(

a) of the Farm Security Act are exempt. [21] With respect to the third and final question, FCC submits there is no basis in law and no sound reason why Mr. Gustafsonshould be permitted to retain the surplus proceeds from the involuntary sale of the Farm Equipment for the purpose of reallocating anyequity therein to the PMSI holders of other exempt farm assets. B. Mr. Gustafson [22] Mr. Gustafson submits that s. 2-10 of The Legislation Act, and its emphasis on the remedial effect of legislation, its object andpurpose, governs how s. 70(2)(

a) should be interpreted. As noted in his factum, he asserts that the object or purpose of the Farm SecurityAct is “to protect farmland and farmers in carrying out farm operations”: see, for example, Hall v Bank of Montreal, (SK CA), [1989] 1 WWR 27 (Sask CA); Agricultural Credit Corporation of Saskatchewan v Smith (1989), (SK KB),77 Sask R 211 (QB) [ACCS Smith] at para 14; and Agricultural Credit Corporation of Saskatchewan v Willett Farms Ltd. (1990), (SK KB), 84 Sask R 255 (QB) at para 5 [Willett].

He finds particular support in Agricultural Credit Corporation ofSaskatchewan v Novak (1995), (SK CA), 134 Sask R 87 at para 82 (CA) [Novak], and in this Court’s most recentdecision in Naber v John Deere Financial Inc., 2020 SKCA 94 [Naber], for his position. He also submits that it would be absurd tointerpret s. 70(2)(

a) in the manner that FCC suggests. [23] As to whether the surplus proceeds of the forced sale of exempt personal property are exempt, Mr. Gustafson submits theChambers judge did not err by relying on Eckhoff, Charles and Agricultural Credit Corporation of Saskatchewan v Bishop (1998), (SK KB), 101 Sask R 68 (QB). In the specific context of farm equipment, Mr. Gustafson also relies on dicta in Teneycke vSaskatchewan Wheat Pool, 2000 SKQB 191 at para 15, 192 Sask R 235, and Agricultural Credit Corporation of Saskatchewan v Palmier, (Sask QB). [24] As to FCC’s third argument, Mr.

Gustafson’s counsel advised the Court that it is no longer possible to use the proceeds in themanner that the Chambers judge directed as the other PMSI interests no longer exist. Nonetheless, Mr. Gustafson’s position is that theproceeds retain their exempt status for use to secure other exempt property. VI. Issues [25] The following issues emerge from the parties’ submissions:

(

a) In general terms, what principles guide the

interpretation of the exemption provisions of the Farm Security Act? Is there astatutory exception to a common law principle at stake? What is the role of strict construction? (

b) In specific terms, how should s. 70(2)(

a) be interpreted? (

c) When a PMSI holder sells equipment that is exempt under s. 66(

d) of the Farm Security Act, and the sale generates surplusproceeds over and above the value of the PMSI, are the surplus proceeds the exempt property of the farmer? How should this issue beresolved in light of s. 94(8) of the Money Judgments Act? (

d) Did the Chambers judge err by ordering that the surplus proceeds be applied to PMSI debts held in relation to other allegedlyexempt farm equipment? VII. Analysis A. Statutory

interpretation principles to apply 1. There is no common law principle at stake in this appeal [26] FCC submits that the Supreme Court has recognized a principle of statutory

interpretation to the effect that exceptions tocommon law principles are to be construed narrowly. In support of this proposition, FCC cites McDiarmid and Heritage. [27] In McDiarmid, the Supreme Court was construing s. 89 and s. 90 of the Indian Act, RSC 1985, c I-5.

Section 89 declares that“the real and personal property of an Indian or a band situated on a reserve is not subject to charge, pledge, mortgage, attachment, levy,seizure, distress or execution in favour or at the instance of any person other than an Indian or a band”.

Section 90 provides that personalproperty derived from the federal Crown or under a treaty “shall be deemed always to be situated on a reserve”. [28] McLachlin C.J., writing for the Court, held that s. 89 and s. 90 “establish specific exceptions to the general rule that theprovincial credit regime will apply to Indian property” (at para 38) and, as such, should be construed narrowly. [29] In Heritage, the issue was whether a positive covenant in favour of a prior registered owner “ran with the land”, which wouldenure to the benefit of the present owner.

After referring to Rizzo & Rizzo Shoes Ltd. (Re), (SCC), [1998] 1 SCR 27[Rizzo], Gascon and Côté JJ., in joint reasons writing for the Supreme Court, made these observations: [29] In addition, where the legislature expressly creates a statutory exception to a common law principle, that exception should benarrowly construed, as the legislature is assumed not to have intended to change the common law unless it has done so clearly andunambiguously. … [30] Professor Sullivan also takes the view that to displace a common law rule, the legislation must show a clear intention to do so.

Applying this principle to the case before it, the Supreme Court in Heritage held that the statutory exception to the common law rule“should be limited by the precise language of the provision and the underlying purpose” (at para 31); and, therefore, the positive covenantdid not run with the land and could not be claimed as property belonging to the current registered owner. [30] In my view, the principle established by McDiarmid and Heritage has no application to this appeal.

Simply put, there is nocommon law principle at stake in this appeal from which the Legislature has created an exception – to paraphrase Heritage. Exemptionslegislation is an integral aspect of the provincial credit regime in this province. Any exception that is being construed, i.e., s. 70(2) of theFarm Security Act, is not an exception to a common law principle but a legislative exception to a legislative regime. 2. What is the role of strict construction in the

interpretation of the Farm Security Act? [31] In A Legacy of Protection: The Saskatchewan Farm Security Act: History, Commentary and Case Law (Langenburg, Sask:Twin Valley Books, 2009) at 522 [Legacy of Protection], Donald H. Layh, Q.C., (now Layh J. of the Court of Queen’s Bench) anticipatedthe issue in this appeal. In the context of interpreting the Farm Security Act, he asked whether the provisions of exemption legislationshould be liberally or narrowly interpreted. He determined that there has been no clear answer to that question: 7.4 Principles of

Interpretation Should exemption legislation be given a broad and liberal

interpretation or, since exemption provisions abrogate ordinary common lawrights, should the legislation be strictly construed? On such a basic question, one would expect the courts would have provided a clearanswer since exemption legislation has so long been a part of the province’s history. In 1929, in McDermid v. Wenzel, [ (SK KB), [1929] 4 DLR 1083 (Sask DC)], Buckles D.C.J. offered clear direction:“One thing, however, seems clear and it is that exemption Acts of this nature are to be construed liberally”. Sirois J., in Agricultural CreditCorp. of Saskatchewan v.

Smith, [(1989), (SK KB), 77 Sask R 211 (QB)] adopted this view and allowed the debtor toclaim more than one motor vehicle as exempt. … Not all judges would agree with this sentiment, suggesting that because exemption legislation is an abrogation of the rights of a creditor itshould be strictly construed. Wright J., in Dietz v. Bank of Montreal, [(1994), (SK KB), 122 Sask R 144 (QB)] statedthat exemption from seizure is an abrogation of the rights of a creditor and any legislation directed to that end should be strictly construed,a decision cited and approved in Con-Agra Ltd v. Shivak [2001 SKQB 35].

Liberal or narrow – which

interpretation should prevail when considering provisions of exemption legislation apparently has not been

resolved by the Saskatchewan courts. (Footnotes omitted, emphasis added) [32] As Layh J. recognized, and the parties’ submissions support, the cases line up on either side of the debate. On the one side,decisions such as Hetherington, Canada v Smith, Shivak, CSP Food Marketing Ltd. v Bank (1985), (SK KB), 38 SaskR 224 (QB), McVicar Royal Bank of Canada (1993), (SK KB), 114 Sask R 69 (QB), and Dolter refer to the need toconstrue exemptions strictly, as being a derogation of the rights of the creditor. [33] However, it should be noted that there is no straight line from the first of these decisions to the last.

Hetherington was issued in1910. It appears to have been next cited in support of the strict construction of exemption statutes in Saskatchewan in Canada v Smith in1983. However, in Canada v Smith, no legislation was actually construed. After citing Hetherington at para 12, the Chambers judgegranted the debtor an exemption to his 1974 Mercedes-Benz, notwithstanding evidence that he used his wife’s car for out-of-town trips.Justice Layh would place Dietz v Bank of Montreal (1994), (SK KB), 122 Sask R 144 (QB) [Dietz], in theHetherington list.

Yet, in Dietz, Wright J. referred to the principle of strict construction of exemption statutes but then proceeded todemonstrate how that principle has been modulated over time in relation to farming debtors: [32] As judges expand items allowed as exempt two different principles come into increasing conflict. Traditionally the law with respectto exemptions was strictly construed, as I have noted, because it abrogated the rights of creditors. Moreover, the burden fell on the debtorto establish his or her claim of exemption.

The law with respect to exemptions for execution debtors has remained relatively unchangedover the years. [33] A different situation has arisen with respect to farmer debtors. They have enjoyed special protection under the law for a very longtime, as I have noted, supra. (Emphasis added) [34] Then, in Shivak, the Chambers judge cited the Hetherington principle from Canada v Smith, but did not cite paragraph 32 ofDietz or the authorities mentioned therein. Dolter, like Canada v Smith, cited Hetherington, but did not actually construe any exemptionprovision.

I should note, as well, that although Hetherington made the statement that exemption legislation should be construed strictly, itcontributed to an expansive

interpretation of homestead rights. [35] On the other side of the debate, the Court of Queen’s Bench and this Court have interpreted exemptions legislation havingregard for the Legislature’s object and intention to preserve farms and farming.

The following decisions are representative: McDermid vWenzel, (SK KB), [1929] 4 DLR 1083 (Sask DC) at para 13; Bank of Montreal v Maccala (1986), (SK KB), 53 Sask R 31 (QB) at para 18; ACCS Smith; Willett; Trans Canada Credit Corporation v Chewka, (SK KB), [1991] 2 WWR 569 (Sask QB) at para 15; Agricultural Credit Corp. of Saskatchewan v Pettyjohn (1991), (SK CA), 79 DLR (4th) 22 (Sask CA) at para 76 [Pettyjohn]; and Agricultural Credit Corporation of Saskatchewan v Krupski(1993), (SK KB), 114 Sask R 211 (QB) at paras 15 and 16. [36] So which line of authority should the courts follow?

It seems self-evident that there can be only one approach to theinterpretation of legislation in this province, and it must be one based on s. 2-10 of The Legislation Act: Acts and regulations remedial 2-10(1) The words of

an Act and regulations authorized pursuant to

an Act are to be read in their entire context, and in their grammaticaland ordinary sense, harmoniously with the scheme of the Act, the object of the Act and the intention of the Legislature.

(2) Every Act and regulation is to be construed as being remedial and is to be given the fair, large and liberal

interpretation that bestensures the attainment of its objects. [37]

Section 2-10 of The Legislation Act replaced s. 10 of The

Interpretation Act, 1995, SS 1995, c I-11.2, which provided asfollows: Enactments remedial 10 Every enactment shall be interpreted as being remedial and shall be given the fair, large and liberal construction and

interpretation thatbest ensure the attainment of its objects. [38] From a comparison of these two provisions, it is clear that s. 2-10(2) of The Legislation Act is a restatement of s. 10 of TheInterpretation Act. However, s. 2-10(1) is new. It is a codification of a principle first endorsed by the Supreme Court in Rizzo, whereIacobucci J. for the Court wrote as follows: [21] … Elmer Driedger in Construction of Statutes (2nd ed. 1983) best encapsulates the approach upon which I prefer to rely. Herecognizes that statutory

interpretation cannot be founded on the wording of the legislation alone. At p. 87 he states: Today there is only one principle or approach, namely, the words of

an Act are to be read in their entire context and in their grammaticaland ordinary sense harmoniously with the scheme of the Act, the object of the Act, and the intention of Parliament. The above principle is often referred to as the modern principle of statutory

interpretation [modern principle] or Driedger’s modernapproach. [39] Four years after Rizzo was released, Iacobucci J., again writing for a unanimous Court, penned another significant decision withrespect to statutory

interpretation: Bell ExpressVu Limited Partnership v Rex, 2002 SCC 42, [2002] 2 SCR 559 [Bell ExpressVu]. In BellExpressVu, the Court addressed an issue that had not arisen on the facts of Rizzo: Where do the presumptions of legislative intent, such as

strict construction, or the use of extrinsic aids fit when construing legislation in accordance with the modern principle? [40] In Bell ExpressVu, Iacobucci J. referred to Driedger’s modern approach as the “preferred approach to statutory

interpretation”(at para 26). Importantly, he held that other principles of statutory

interpretation enter the interpretive exercise only in the event ofambiguity: “Other principles of

interpretation – such as the strict construction of penal statutes and the ‘Charter values’ presumption –only receive application where there is ambiguity as to the meaning of a provision” (at para 28). [41] As Iacobucci J. noted, ambiguity in this context is not a term used loosely. For a legislative provision to be consideredambiguous, the ambiguity must be real. It is not enough to come up with two differing

interpretations. An ambiguity arises only in theevent of two or more plausible meanings, each equally in accordance with the intentions of the statute: [29] What, then, in law is an ambiguity? To answer, an ambiguity must be “real” (Marcotte, [ (SCC), [1976] 1 SCR 108], atp. 115). The words of the provision must be “reasonably capable of more than one meaning” (Westminster Bank Ltd. v. Zang, [1966] A.C.182 (H.L.), at p. 222, per Lord Reid). By necessity, however, one must consider the “entire context” of a provision before one candetermine if it is reasonably capable of multiple

interpretations. In this regard, Major J.’s statement in CanadianOxy Chemicals Ltd. v.Canada (Attorney General), (SCC), [1999] 1 S.C.R. 743, at para. 14, is apposite: “It is only when genuine ambiguityarises between two or more plausible readings, each equally in accordance with the intentions of the statute, that the courts need to resortto external interpretive aids” (emphasis added), to which I would add, “including other principles of

interpretation”. [30] For this reason, ambiguity cannot reside in the mere fact that several courts – or, for that matter, several doctrinal writers – have cometo differing conclusions on the

interpretation of a given provision. Just as it would be improper for one to engage in a preliminary tallyingof the number of decisions supporting competing

interpretations and then apply that which receives the “higher score”, it is notappropriate to take as one’s starting point the premise that differing

interpretations reveal an ambiguity. It is necessary, in every case, forthe court charged with interpreting a provision to undertake the contextual and purposive approach set out by Driedger, and thereafter todetermine if “the words are ambiguous enough to induce two people to spend good money in backing two opposing views as to theirmeaning” (Willis, [“Statute

Interpretation in a Nutshell” (1938), 16 Can Bar Rev 1], at pp. 4–5). (Italic emphasis in original, underline emphasis added) See also R v Jarvis, 2019 SCC 10 at paras 105 and 106, [2019] 1 SCR 488. [42] The Supreme Court has also considered the role of strict construction when interpreting legislation that interferes with privateor property rights: Canada 3000 Inc., Re; Inter-Canadian

(1991) Inc. (Trustee of), 2006 SCC 24 at para 84, [2006] 1 SCR 865 [Canada3000]. [43] In Canada 3000, the issue was whether an aircraft owned by one corporation and leased by another could be detained assecurity for the debt of the latter. Speaking for the Supreme Court, Binnie J. acknowledged the “presumption against interference withprivate rights” and the principle of strict construction but affirmed that the principle applies only in the circumstances described in BellExpressVu:

(5) Presumption Against Interference With Private Rights [84] The Ontario motions judge applied a narrow approach to the Detention Remedy on the basis that it invades what would otherwise bethe proprietary rights of the legal titleholders. Reference was made to Royal Bank of Canada v. Sparrow Electric Corp., (SCC), [1997] 1 S.C.R. 411, where it was held that the legislation at issue in that case did not impose a charge in the nature of a lienbecause of the absence of clear and unambiguous language. However, only if a provision is ambiguous (in that after full consideration ofthe context, multiple

interpretations of the words arise that are equally consistent with Parliamentary intent), is it permissible to resort tointerpretive presumptions such as “strict construction”. The applicable principle is not “strict construction” but s. 12 of the

InterpretationAct, which provides that every enactment “is deemed remedial, and shall be given such fair, large and liberal construction andinterpretation as best ensures the attainment of its objects”; see Bell ExpressVu, at para. 28: Other principles of

interpretation – such as the strict construction of penal statutes and the “Charter values” presumption – only receiveapplication where there is ambiguity as to the meaning of a provision. (On strict construction, see: Marcotte v. Deputy Attorney Generalfor Canada, (SCC), [1976] 1 S.C.R. 108, at p. 115, per Dickson J. (as he then was); R. v. Goulis (1981), (ON CA), 33 O.R. (2d) 55 (C.A.), at pp. 59-60; R. v. Hasselwander, (SCC), [1993] 2 S.C.R. 398, at p. 413; R. v. Russell,[2001] 2 S.C.R. 804, 2001 SCC 53, at para. 46. …).

In my view, there is no ambiguity in the statutory language creating the detention remedy and thus resort to “strict construction” is notcalled for. (Emphasis added) [44] Courts of appeal have taken a similar approach to the presumption against interference with private rights in other contexts. InTyendinaga Mohawk Council v Brant, 2014 ONCA 565, 375 DLR (4th) 751, the Court was required to interpret s. 29 and s. 89 of theIndian Act. The issue was one of property rights. Justice LaForme, for the Court, wrote as follows: “strict construction of statutes hasgiven way to purposive and contextual

interpretation” (at para 51). See also Toronto Standard Condominium Corporation No. 1908 vStefco Plumbing & Mechanical Contracting Inc., 2014 ONCA 696 at para 37, 377 DLR (4th) 369. [45] Similarly, in Iberdrola Energy Projects Canada Corporation v Factory Sales & Engineering Inc. d.b.a. FSE Energy, 2018BCCA 272, 425 DLR (4th) 56, the Court considered provisions of the Builders Lien Act, SBC 1997, c 45. The appellant in that casecontended that the Builders Lien Act should be strictly construed as it derogates from freedom of contract.

In response, Groberman J.A.wrote, “While Bell ExpressVu did not entirely eliminate the concept of strict construction, it did … relegate it to a limited and secondaryrole in statutory

interpretation” (at para 30) and “In the post-Bell ExpressVu environment, this Court has refrained from applyingprinciples of strict construction where the modern rule suffices to interpret a statute” (at para 31). See also Tuteckyj v Winnipeg (City),2012 MBCA 100 at paras 47–54, 284 Man R (2d) 261.

[46] Recently, the Supreme Court has issued some decisions that appear to stress the importance of text over context and purpose.Originally this was an approach that seemed to be confined to the

interpretation of tax legislation (see Canada Trustco MortgageCompany v Canada, 2005 SCC 54 at para 10, [2005] 2 SCR 601 [Canada Trustco]). However, the Supreme Court has mentioned CanadaTrustco in other contexts. In Celgene Corporation v Canada (Attorney General), 2011 SCC 1, [2011] 1 SCR 3, for example, the SupremeCourt wrote as follows: “The words, if clear, will dominate; if not, they yield to an

interpretation that best meets the overriding purpose ofthe statute” (at para 21). Similarly, in Orphan Well Association v Grant Thornton Ltd, 2019 SCC 5, [2019] 1 SCR 150, the majority wrote,“in view of the clear and unambiguous wording of s. 14.06(4), less weight should be given to its statutory context” (at para 88). See alsoCanada (Minister of Citizenship and Immigration) v Vavilov, 2019 SCC 65 at para 120, 441 DLR (4th) 1, and 9354-9186 Québec inc vCallidus Capital Corp, 2020 SCC 10 at para 60, 444 DLR (4th) 373.

For a recent review of these decisions, see R v Garland, 2021 ABCA46. [47] I do not interpret the above jurisprudence as marking a departure from the modern principle. Depending on the legislation to beinterpreted and the submissions, changes in emphasis can be expected. Moreover, the Supreme Court continues to embrace the modernprinciple. Rizzo or Bell ExpressVu or both are regularly cited in support of a purposive analysis: B.C. Freedom of Information and PrivacyAssociation v British Columbia (Attorney General), 2017 SCC 6, [2017] 1 SCR 93 [B.C.

Freedom of Information]; R v Alex, 2017 SCC 37at paras 21 and 24, [2017] 1 SCR 967 [Alex]; R v Myers, 2019 SCC 18 at para 19, [2019] 2 SCR 105; TELUS Communications Inc. vWellman, 2019 SCC 19 at para 47, [2019] 2 SCR 144; R v Penunsi, 2019 SCC 39 at para 36, 435 DLR (4th) 65; Pioneer Corporation vGodfrey, 2019 SCC 42 at para 42, 437 DLR (4th) 383; and R v Rafilovich, 2019 SCC 51 at para 20, 442 DLR (4th) 539 [Rafilovich] – toname only a few such decisions. [48] In this Court, there is nothing particularly new about the application of the modern principle or of the principles expressed inBell ExpressVu to determine whether a particular provision or Act should be strictly construed.

In Prince Albert (City) v Domtar Pulp &Paper Products Inc., 2011 SKCA 151 at para 29, 385 Sask R 95, Richards J.A. (as he then was), wrote for the Court: [29] I pause here to note that it is appropriate to use a broad and purposive approach in interpreting municipal legislation like the PAPCOAct and, because it is a

schedule to the PAPCO Act, in interpreting Bylaw No. 1 itself. The relevant principles were described as followsby the Supreme Court of Canada in United Taxi Drivers’ Fellowship of Southern Alberta v. Calgary (City), 2004 SCC 19, [2004] 1 S.C.R.485: [6] The evolution of the modern municipality has produced a shift in the proper approach to the

interpretation of statutes empoweringmunicipalities. This notable shift in the nature of municipalities was acknowledged by McLachlin J. (as she then was) in Shell CanadaProducts Ltd. v. Vancouver (City), (SCC), [1994] 1 S.C.R. 231, at pp. 244-45. The “benevolent” and “strict”construction dichotomy has been set aside, and a broad and purposive approach to the

interpretation of municipal powers has beenembraced: Nanaimo, supra, at para. 18. This interpretive approach has evolved concomitantly with the modern method of draftingmunicipal legislation. … … [8] A broad and purposive approach to the

interpretation of municipal legislation is also consistent with this Court’s approach to statutoryinterpretation generally. The contextual approach requires “the words of

an Act … to be read in their entire context and in theirgrammatical and ordinary sense harmoniously with the scheme of the Act, the object of the Act, and the intention of Parliament” … . [49] In Grey Owl Engineering Ltd. v Propak Systems Ltd., 2015 SKCA 108 at para 32, I wrote for the Court, indicating that thequestion is not strict construction but ascertaining the real intention of the Legislature: [32] Propak relies on Arthur Andersen [2002 SKCA 105] to argue that a strict

interpretation should be given to the definition of an“improvement” because this

interpretation dictates who will be entitled to claim a lien. In Arthur Andersen, this Court considered whethera contract constituted a “single contract” for the purpose of s. 29 of the Act, which deals with general liens. The Court referred to ClarksonCompany Ltd. v Ace Lumber Ltd., (SCC), [1963] SCR 110 [Clarkson Company], where the Supreme Court held thatmechanics’ lien legislation must be given a strict

interpretation in determining whether any lien-claimant is a person to whom a lien isgiven by it. It would appear that the approach to statutory

interpretation articulated in Clarkson Company has been overtaken by suchauthorities as Rizzo & Rizzo Shoes Ltd. (Re), (SCC), [1998] 1 SCR 27, Bell ExpressVu Limited Partnership v Rex, 2002SCC 42 at paras 28–30, [2002] 2 SCR 559; and Merk v International Association of Bridge, Structural, Ornamental and Reinforcing IronWorkers, Local 771, 2005 SCC 70 at paras 32 and 33, [2005] 3 SCR 425 [Merk].

In Merk, the Supreme Court of Canada referred to theneed to determine the real intention of the Legislature. [50] Then, in R v Big River First Nation, 2019 SKCA 117, 28 CELR (4th) 218, the appellant claimed “the benefit of the commonlaw presumption in favour of strict construction of penal statutes” (at para 18). After referring to paras 29 and 30 of Bell ExpressVu,Barrington-Foote J.A., for the Court, wrote as follows: [21] Ruth Sullivan, in Sullivan on the Construction of Statutes, 6th ed (Markham, Ont: LexisNexis, 2014) at 485–487 [Sullivan], criticizesthis approach to ambiguity and presumptions.

In her view, it “falsely presumes that legal norms do not form part of the context in whichlegislation is drafted and read” and is inconsistent with the test adopted in Rizzo, as that test eliminated the need to distinguish plain fromambiguous texts. Although these criticisms have a certain doctrinal appeal, the Bell ExpressVu approach has been affirmed by theSupreme Court of Canada and by this Court: see, for example, R v Clarke, 2014 SCC 28 at para 12, [2014] 1 SCR 612; R v D.L.W., 2016SCC 22 at para 138, [2016] 1 SCR 402; Canada 3000 Inc. (Re); Inter-Canadian

(1991) Inc. (Trustee of), 2006 SCC 24 at para 84, [2006]1 SCR 865; and Holtby-York v Saskatchewan Government Insurance, 2016 SKCA 95 at paras 23–24, [2016] 11 WWR 655. Further, thereis a sound argument that the Bell ExpressVu approach more fully respects Parliament’s direction to interpret all enactments in accordancewith the principles specified in s. 12 of the

Interpretation Act. [22] In R v Jaw, 2009 SCC 42, [2009] 3 SCR 26, which related to ambiguity in a jury charge, LeBel J. made the following obitercomments, which reflect a slightly different take on what a court should do when ambiguity is found to exist: [38] … I have reservations about the proposition that any uncertainty in a charge must, as a matter of course, be resolved in favour of the

accused. This proposition seems to be based on the strict constructionist approach to interpreting penal legislation that developed in theeighteenth century, when criminal law sanctions were especially severe. By the mid-1980s, however, the presumption of a restrictiveinterpretation of penal statutes had started to wear thin (R. Sullivan, Sullivan on the Construction of Statutes (5th ed. 2008), at pp. 472–74). A restrictive

interpretation may be warranted where an ambiguity cannot be resolved by means of the usual principles ofinterpretation. But it is a principle of last resort that does not supersede a purposive and contextual approach to

interpretation. (R. v. Paré, (SCC), [1987] 2 S.C.R. 618; R. v. Chartrand, (SCC), [1994] 2 S.C.R. 864, at pp. 881–82; R. v. Mac, 2002SCC 24, [2002] 1 S.C.R. 856, at para. 4). Even if the impugned statement in the instant case did disclose a true ambiguity, an attemptwould first have to be made to resolve it by resort to general principles and methods of

interpretation. (Emphasis in original) [23] This “last resort” formulation – including the notion of attempting to resolve ambiguities by resorting to general principles andmethods of

interpretation – was cited with approval in Re:

section 487.02 of the Criminal Code, 2019 NLCA 6 at para 33, and in Bodnar vCommunity Savings Credit Union, 2018 BCCA 121 at para 23, 421 DLR (4th) 620. See also Sullivan at 496–497. It is not clear what afurther resort to “general principles and methods of

interpretation” might entail, given that ambiguity can be found to exist only after thecontextual and purposive analysis required by the modern principle and s. 12 of the

Interpretation Act has taken place. (Italic emphasis in original, underline emphasis added) [51] After conducting the required contextual analysis, Barrington-Foote J.A. concluded that there was no ambiguity in the relevantprovisions. As such, it was not necessary “to deal further with the presumption in favour of strict construction” (at para 48). [52] Most recently, the Court was required to determine how two limitation provisions in two separate statutes should be interpreted:Lorencz v Talukdar, 2020 SKCA 28, 446 DLR (4th) 487 [Lorencz].

After citing a series of decisions including Berardinelli v OntarioHousing Corporation, (SCC), [1979] 1 SCR 275 and Platana v Saskatoon (City), 2006 SKCA 10, 263 DLR (4th) 603[Platana], Leurer J.A., writing for the Court, concluded as follows: [136] First, as a general proposition, it should now not be controversial to say that statutes that prescribe time limitations for bringing anaction attract a strict

interpretation and “any ambiguity found upon the application of the proper principles of statutory

interpretationshould be resolved in favour of the person whose right of action is being truncated” (Berardinelli at 280; Ordon Estate at para 136; seealso Tardif Estate at para 43). … [139] The final, and most important, takeaway from these cases is that the analysis should remain grounded in the modern principle ofstatutory

interpretation … . [53] Justice Leurer did not refer to Bell ExpressVu, but his conclusion is in line with the reasoning in that decision, especially withthis oft-repeated statement by Iacobucci J.: “Other principles of

interpretation – such as the strict construction of penal statutes and the‘Charter values’ presumption – only receive application where there is ambiguity as to the meaning of a provision” (at para 28). See alsoPlatana at para 110. [54] In light of this review of the authorities, the statement in Hetherington to the effect that exemption statutes should be construedstrictly in all cases no longer represents the law in this province and should not be followed. As Iacobucci J. held in Bell ExpressVu, acourt should resort to a principle of

interpretation like strict construction only when genuine ambiguity arises between two or moreplausible readings, each equally in accordance with the intentions of the statute. Importantly, before a court can determine if a provision isreasonably capable of more than one plausible

interpretation, the court must engage in the contextual and purposive approach originallysuggested in Rizzo and now mandated by s. 2-10 of The Legislation Act. [55] What does s. 2-10 of The Legislation Act require? Bell ExpressVu provides guidance on this point. In that case, Iacobucci J.indicated that the interpretive factors, such as those laid out in s. 2-10, “need not be canvassed separately in every case, and in any eventare closely related and interdependent” (citations omitted, at para 31).

Justice Iacobucci grouped his analysis of the s. 2-10 factors at issuein that decision under two broad headings: “grammatical and ordinary sense” and “broader context”. [56] In Merk v International Association of Bridge, Structural, Ornamental and Reinforcing Iron Workers, Local 771, 2005 SCC 70at paras 18–35, [2005] 3 SCR 425 [Merk], Binnie J. for the majority analyzed the provision in question by considering multiple factors: (

a) the grammatical and ordinary sense of the words; (

b) the scheme of the Act; (

c) the object of the Act; (

d) the public policy debate surrounding the provision in question; (

e) the need to avoid anomalous results; (

f) the legislative history; and (

g) the penal nature of the legislation. After assessing the words of the enactment in this disciplined analysis, he decided how they should be interpreted. [57] As well, in Canada 3000, Binnie J. began by examining the ordinary and grammatical meaning of the single word at issue inthat case, i.e., owner in s. 55 of the Civil Air Navigation Services Commercialization Act, SC 1996, c 20. He noted that if the word were

considered in isolation, owner would include the legal titleholder. Thereafter, Binnie J. considered (

a) the statutory context of s. 55 , (

b) the broader legislative framework, and (

c) the legislative history. From this analysis, Binnie J. concluded that the titleholders were not as a matter of law owners within the meaning of s. 55 . However, a second interpretive issue was resolved by a review of the legislative and regulatory provisions in light of their purpose as part of a “straightforward task of statutory

interpretation” (at para 75). As part of this exercise, Binnie J. addressed specific arguments made by the parties, including a claim that the legislation should be construed strictly. He found “n o ambiguity in the statutory language creating the detention remedy and thus resort to ‘strict construction’ [was] not called for” (at para 84). Numerous other examples could be cited where the Supreme Court has followed a similar approach to determining the meaning of any given legislative provision: see, by way of example only, B.C.

Freedom of Information , Alex and Rafilovich . [ 58 ] At least since the Supreme Court released Rizzo in 1998, courts have been required to adopt a purposive analysis “in every case”, not just when there has been a suggestion of ambiguity or absurdity (Ruth Sullivan, Sullivan on the Construction of Statutes , 6th ed (Markham, Ont: LexisNexis, 2014) at 261 [ Sullivan ]). In some cases, the interpretive exercise can be abbreviated because the purpose is revealed or can be inferred from the text itself ( Sullivan at 281).

In other cases, meaning will be revealed only by the discipline of a purposive analysis and a review of the s. 2-10 factors. Much will depend on context, evidence and argument such that it is difficult to generalize as to which aspects of s. 2 - 10 will be relevant in any given exercise of statutory

interpretation. As Iacobucci J. indicated in Bell ExpressVu , the s. 2 - 10 factors are not water-tight; they are connected. One thing though is clear, legislative purpose is taken into account in every case and at “every stage of

interpretation, including initial determination of a text’s meaning” ( Sullivan at 259). B. Applying s. 2-10 of The Legislation Act to the

interpretation of s. 70(2)(

a) of the Farm Security Act [ 59 ] FCC reads s. 70(2)(

a) as removing the s. 66 exemption generally from chattels that are covered by a PMSI. It is from this proposition that FCC develops its hypothesis that the surplus proceeds remaining after a PMSI is satisfied are non-exempt. Mr. Gustafson asserts the contrary, saying that s. 70(2)(a), read in its entire context in light of its purpose, can mean only one thing: s. 70(2)(

a) declares goods, which would otherwise be exempt under s. 66 and s. 68, to be not exempt as against PMSI holders only . In other words, it is only the PMSI holder that can seize and sell the asset declared to be not exempt under s. 70(2)(a). [ 60 ] The foundation of FCC’s argument is in essence a claim of strict construction. FCC submits that since s. 68 derogates from its contractual right to seize, s. 70(2)(

a) should be strictly construed in its favour. As I have indicated above, FCC can succeed with this argument only if there are two or more plausible

interpretations of s. 70(2)(a), each equally consistent with the Legislature’s intention. [ 61 ] In my view, a purposive analysis of s. 70(2)(

a) leads to the conclusion that there is only one plausible

interpretation of s. 70(2) (

a) consistent with the Legislature’s intent. The Legislature has granted the PMSI creditor a special status. Only a PMSI creditor can seize and sell an exempt asset that is secured by a PMSI. Clause 70(2)(

a) is not a general declaration of non-exemption of for all purposes. Since there is only one plausible

interpretation, there is no need to resort to the principle of strict construction. a. Ordinary and grammatical meaning of the words in s. 70(2)(a) [ 62 ] Admittedly, s. 70(2)(

a) does say that

Part V “does not exempt from seizure and sale goods that are covered by … a security agreement that creates a purchase-money security interest as defined in The Personal Property Security Act, 1993 ”. But, if this provision is read literally or strictly, it does not answer the question of who can seize such goods. For that, one must read s. 70(2)(

a) in context. Reading it in light of the other relevant exemption provisions, it is evident that only a PMSI creditor can seize and sell an otherwise exempt asset under s. 70(2)(a). It also must be noted that even on a literal or strict reading of s. 70(2)(a), when an asset is no longer covered by a PMSI, i.e., if the PMSI is satisfied or the asset is sold and generates proceeds, s. 70(2)(

a) has no application as the goods are no longer covered by a security agreement that creates a PMSI. In such circumstances, the only provisions that could apply are either s. 66 or s. 68. b. The statutory context [ 63 ] The meaning of s. 70(2)(

a) is revealed by considering it in context with s. 66(d), 68 and the whole of s. 70: Exemptions under executions 66 The following property of a farmer and his or her family is declared free from seizure under judgment enforcement : … (

d) all livestock, farm machinery and equipment , including one automobile or one farm truck, that are reasonably necessary for the proper and efficient conduct of the farmer’s agricultural operations for the next 12 months ; Exemptions under security agreement 68

(1) Notwithstanding any Act or agreement, where a farmer executes a security agreement on any of the chattels mentioned in

section 66 , the farmer may hold free from seizure any of those chattels that are covered by the security agreement and that would be exempt pursuant to

section 66 from seizure. Exceptions 70

(1) Except in the case of food, clothing and bedding of the farmer and the farmer’s family, this Part does not exempt from seizure an

article the price of which forms the subject-matter of the judgment on which the execution is issued.

(2) Except in the case of food, clothing and bedding of the farmer and the farmer’s family, this Part does not exempt from seizure and sale

goods that are covered by: (

a) a security agreement that creates a purchase-money security interest as defined in The Personal Property Security Act, 1993 ; or (

b) a security agreement that describes a security interest described in subsection 34(11) or (12) of The Personal Property Security Act, 1993 . (Emphasis added) [ 64 ] Reading each of these provisions consistently, the Legislature has directed the following: (

a) in s. 66, certain items of property are “free from seizure under judgment enforcement”, i.e., a judgment creditor, as opposed to a secured creditor, cannot seize those assets; (

b) in s. 68, chattels that are free from seizure under s. 66, are also free from seizure if they are “covered by” a security agreement, i.e., a secured creditor cannot seize those chattels; (

c) in s. 70(1), an

article the price of which “forms the subject-matter of the judgment on which the execution is issued”, is not exempt from seizure, i.e., the judgment creditor who sold the

article or loaned the money to buy it may seize otherwise exempt articles; (

d) in s. 70(2)(a), goods that are “covered by” a security agreement that creates a purchase-money security interest are not exempt from seizure, i.e., the PMSI creditor may seize it; and (

e) in s. 70(2)(b), goods that are “covered by” a security agreement that describes a security interest in s. 34(11) or s. 34(12) of the Personal Property Security Act , i.e., crops or livestock, are not exempt from seizure, i.e., the holder of the security interest may seize such goods. [ 65 ] FCC has focused on s. 70(2)(

a) only and reads it as reaching back to eliminate the s. 66 exempt status for all purposes if the farmer has granted a PMSI interest in the goods. The logical extension of this argument would mean that, before the PMSI has been satisfied, any creditor could seize the asset, pay out the PMSI holder and capture the equity. After the PMSI has been satisfied, following the logic of FCC’s argument, any creditor could seize the asset in order to pay back debt. In my view, this ignores the framework, which carves out exceptions to s. 66 and s. 68 for those creditors who permit the acquisition of articles, chattels or goods. A closer look at the provisions in question makes this point clear. [ 66 ]

Section 66 is the starting point. It lists what property is exempt from judgment enforcement. [ 67 ]

Section 68 extends the s. 66 protection to chattels that are covered by a security agreement. By virtue of s. 68, a secured creditor that has loaned money on the security of chattels that the Legislature has declared to be exempt under s. 66 cannot seize them. In other words, s. 68 takes away the secured creditor’s right to seize exempt chattels . [ 68 ]

Section 70 creates three exceptions to s. 66 and s. 68. First, s. 70(1) allows a judgment creditor to seize an exempt

article if the price of the

article is the subject-matter of the judgment, i.e., the functional equivalent of a purchase-money security interest. Second, s. 70(2)(

a) allows a PMSI holder to seize, in accordance with its security agreement, to recoup a PMSI debt. Third, s. 70(2)(

b) allows a PMSI holder of an interest in crops or livestock to recoup PMSI debt granted for the purposes outlined in s. 34(11) or s. 34(12) of the Personal Property Security Act . [ 69 ] In the scenario before the Court, it is common ground that the Farm Equipment is exempt under s. 66(d). This means that a judgment creditor could not seize the Farm Equipment. It is also common ground that s. 68 would prohibit any secured creditor from seizing the Farm Equipment. [ 70 ] FCC is a secured creditor.

The only security interest it held in the Farm Equipment was a general security agreement in all present and after acquired property. This meant that FCC was prohibited by s. 68 from seizing the Farm Equipment under its security agreement. Nothing in s. 70(2)(

a) changes that legal fact. [ 71 ] Clause 70(2)(

a) does not create an exemption-free zone when a PMSI is granted in s. 66 goods. To put the matter as plainly as possible: a non-PMSI secured creditor cannot assert the rights of a PMSI creditor by virtue of an isolated reading of s. 70(2)(

a) alone. If it were otherwise, both the s. 66 exemption and the s. 68 extension of the s. 66 exemption to secured creditors would be essentially eliminated. In light of s. 66 and s. 68, the Legislature cannot be taken to have returned the right to seize an otherwise exempt asset to secured creditors under s. 70(2)(a). The only carve-out is for one type of secured creditor, i.e., the PMSI creditor. [ 72 ] In support of this

interpretation, reference may be made to a Legacy of Protection , where Layh J. observes that s. 70(2)(

a) creates an exception for one type of secured creditor only, i.e., the PMSI holder. He writes as follows (at 462): In Saskatchewan another advantage accrues to secured parties holding a purchase money security interest in goods: they can circumvent the debtor’s exemption for the goods, even though the goods would otherwise be exempt under [now the Money Judgments Enforcement Act ] or the SFSA [ Farm Security Act ] .

Most cases in Saskatchewan that have addressed the concept of purchase money security interest have pitted secured parties, not against other secured parties to sort out a priority dispute under The Personal Property Security Act , but against the debtor who wishes to maintain an exemption claim for personal property. If successful, the secured party’s purchase money security interest will defeat the debtor’s claim of exemption for the goods. (Emphasis added) [ 73 ] The author also indicates that the purpose of s. 70(2)(

a) is to encourage financing to allow farmers to acquire goods (at 462): The policy of ensuring secured parties can seize goods that they have financed and against which they have reserved a purchase money

security interest is apparent: secured parties will not provide financing to allow debtors to acquire goods if the goods remain exempt from seizure. Subsection 70 (2)(

a) of the SFSA, like subsection 5(1) of The Exemptions Act , ensures that secured parties holding a purchase money security interest in goods are unaffected by exemption protection. In other words, a PMSI lender, knowing that it has priority in the seizure queue, will lend when otherwise it might not have. In order to accomplish this purpose, it is not necessary to interpret s. 70(2)(

a) as making PMSI assets non-exempt so as to allow access to surplus proceeds for all creditors. [ 74 ] It is also worth noting that this Court in Pettyjohn was required to apply s. 70(2)(a). Both parties in Pettyjohn acknowledged that the personal property at issue was exempt from seizure unless the secured creditor had a PMSI in the property. Nonetheless, it is of some significance that neither the majority nor the minority of the Court had any difficulty in holding that s. 70(2)(

a) did not permit the creditor to claim what amounted to the proceeds beyond the value of the PMSI in that case. [ 75 ] In Pettyjohn , Agricultural Credit Corporation of Saskatchewan [ACCS] held a PMSI interest in certain cattle of the farmer. When the farmer voluntarily sold the cattle and bought other cattle, one issue was how much of the value of the new herd could ACCS claim. Sherstobitoff J.A., writing for the majority, held that s. 70(2)(

a) prevented ACCS from realizing on its security except to the extent that it had a PMSI: [76] … Furthermore, it remains true in this context that fairness as between the debtor and creditor is not relevant . For the very existence of the exemption from seizure is itself unfair to the creditor. By virtue of the security agreements entered into by the Pettyjohns, ACCS has a security interest in all of the cattle owned by the Pettyjohns, including the 1981 and 1984 cattle in which ACCS also had a PMSI, but also including all the other cattle the Pettyjohns disposed of, and indeed the present Watusi cattle.

ACCS is, however, prevented from realizing upon its security by the exemption provisions of the SFSA [ Farm Security Act ], except to the extent that they hold a PMSI.

This is most unfair to ACCS, but the legislature has decided that as a matter of public policy it is more important for farmers to retain the assets required to engage in farming than for lenders to be able to realize on security , except where a PMSI exists. (Italic emphasis in original, underline emphasis added) [ 76 ] The result in Pettyjohn supports the conclusion that FCC, as a non-PMSI creditor, cannot claim a s. 66 exempt asset simply by virtue of the fact that a PMSI had been granted in that asset. c.

Legislative Purpose [ 77 ] As Sullivan indicates, the purpose of an enactment may be inferred in different ways. One way is to rely on descriptions of purpose in previous case law (at 278). Given the longevity of the Farm Security Act , this Court has considered the purpose of the Act as a whole and of

Part V in prior appeals. i. General Purpose of the Farm Security Act [ 78 ] Recently, in Naber , Ryan-Froslie J.A. held that the Legislature enacted the Farm Security Act for the benefit of farmers and to assist them in retaining farming operations following financial hardship: [22] The SFSA [ Farm Security Act ] is farm debt legislation enacted for the benefit of farmers. Its full title suggests its object:

an Act to provide for security for Saskatchewan family farms. The purpose of the SFSA is to assist farmers to retain their farming operations in the face of financial instability, generated by the vagaries of the farming industry such as weather, blight, transportation and market upheavals. It provides farmers with protection against seizure of their land and equipment and provides additional tools to enable them to work out accommodations with their creditors. See also Herrnbock v Input Capital Corp ., 2020 SKCA 120 at para 23 , quoting from Naber . [ 79 ] Interpreting s. 70(2)(

a) as FCC suggests would be contrary to the purpose of the Farm Security Act , i.e., assisting farmers to retain their farming operations in the face of financial instability (see Naber at para 22 ). FCC’s suggested

interpretation would permit any creditor other than the PMSI creditor to seize an asset that is or has been at any point collateral for a PMSI. This

interpretation would remove a significant part of farming assets from exemption protection. ii. Purpose of

Part V of the Farm Security Act [ 80 ] Sections 66, 68 and 70 are found in

Part V of the Farm Security Act .

Part V is entitled “Exemptions”. In Novak , Bayda C.J.S. spoke about the special protection offered to farmers under the Farm Security Act . He referred to the purpose of general exemptions legislation and the added special purpose of exemptions legislation directed to preserving farming communities: [44] The purpose of general exemptions legislation such as the Exemptions Act , R.S.S. 1978, c.

E-14 , is the assurance, as much as it is possible to do so, that no debtor after a seizure of her or his assets with the object that they will be used to pay her or his debts, will be left destitute, without a home for herself or himself (and her or his family) and unable to earn a living . Until the passing of the SFSA [ Farm Security Act ] in 1988-89 farmers were included in the general exemptions legislation as contained in the Exemptions Act and its predecessor Acts dating back to Ordinances of the Northwest Territories .

Hence the purpose of the legislation related to and operated for the benefit of farmers in the same way as it did for other debtors. In 1988-89 farmers were excluded from the Exemptions Act (see s. 1.1(1.2) ) and a special set of exemptions was established in the SFSA to apply to farmers only. The exclusion from the general legislation and the establishment of special legislation was not without a purpose. … [46] … s. 66 as part of the SFSA has not only the general purpose similar to that of all general exemptions legislation, but the added

special purpose of preserving the farming community of the province and the institution of the family farm as much as it is possible to do so. The added purpose makes it perfectly logical for the legislators wanting to save from seizure the farm home that is part and parcel of a farmer’s farming operation even though he or she has an urban home. (Emphasis added) While Bayda C.J.S. was writing for himself in Novak , neither of the other two judges, Lane J.A., who concurred in the result, nor Wakeling J.A., writing in dissent, disagreed with this statement of purpose. FCC proposes an

interpretation that is contrary to exemptions legislation directed to preserving farming communities. d. Conclusion on the

interpretation of s. 70(2)(a) [ 81 ] Respectfully, it is my view that s. 70(2)(

a) confers a right on a PMSI creditor to seize chattels that would otherwise be exempt by virtue of s. 66 and s. 68. Clause 70(2)(

a) is beneficial to the farmer as well as to the PMSI creditor. The provision is not ambiguous, which means that it is not necessary to resort to the principle of strict construction. At the very least, following the approach outlined in Bell ExpressVu , there are not two plausible

interpretations that are equally consistent with the Legislature’s intent. In short, s. 70(2)(

a) removes exemption protection in order to permit a purchase-money secured creditor to enforce its security interest in an otherwise exempt asset that is secured by such a creditor’s PMSI. C. The surplus proceeds of the forced sale of exempt goods are also exempt [ 82 ] Having found that the Farm Equipment retains its exempt status as against all creditors, other than the PMSI creditor, i.e., Nelson Motors, the question is whether the money proceeds of exempt goods remaining after the PMSI was satisfied are also exempt.

FCC submits that the surplus proceeds are not exempt. [ 83 ] On this point, the Chambers judge wrote, “There is ample authority for the proposition that, where money is generated from the sale of an exempt asset, the proceeds – to the extent of the exemption – are also exempt” (at para 16). [ 84 ] The Chambers judge then reviewed two lines of authority. According to the first, the proceeds from a forced sale of an exempt home are exempt from seizure: Eckhoff at para 29 and Charles at para 81 .

In the second, the Court of Queen’s Bench noted that insurance proceeds of an exempt asset are also exempt from seizure: Thomas at para 8 . [ 85 ] The Chambers judge’s analysis responded to the arguments that were presented to her. Mr. Gustafson’s position was that he was entitled to the proceeds from the sale of an exempt asset, either on the basis of the Eckhoff or the Thomas line of authorities. According to FCC, the Farm Equipment was not exempt and Mr.

Gustafson’s intention to pay off any PMSI debt on other collateral did not make the proceeds exempt. [ 86 ] In this Court, for the first time, the parties have raised questions concerning the application of the Money Judgments Act to the resolution of their dispute. First, FCC asserts that, at common law, once exempt goods are sold, the exemption is lost and as such does not extend to any surplus proceeds. Second, FCC argues that if the common law did recognize an exemption in the proceeds of sold goods, that principle no longer exists for farm equipment.

It no longer applies, according to FCC, because s. 94 of the Money Judgments Act , which deals with the distribution of surplus proceeds of exempt assets, does not refer to the Farm Security Act . [ 87 ] Mr. Gustafson argues that the common law does recognize that an exemption continues on and into surplus proceeds, at least when the proceeds are derived from a forced sale. In response to FCC’s second argument, Mr. Gustafson argues that s. 94 of the Money Judgments Act does, as a matter of law, apply.

If it applies imperfectly, he says it should not be interpreted so as to take away farmers’ common law rights to proceeds derived from a forced sale of an exempt asset. [ 88 ] In assessing these arguments, I will first consider the position at common law. Then I will consider whether the Money Judgments Act applies and its effect on the common law as it relates to the exempt status of the proceeds of the sale of exempt goods. 1.

At common law, an exemption extends to the surplus proceeds of the forced sale of goods [ 89 ] On this point, FCC submits that only the proceeds of the forced sale of exempt real property – as opposed to personal property – are exempt at common law. In my respectful view, the Chambers judge correctly concluded that the proceeds of the forced sale of goods are exempt. Indeed, for the resolution of this issue one need look only to the leading text in the area: C.R.B.

Dunlop, Creditor–Debtor Law in Canada , 2d ed (Toronto: Carswell, 1995) at 470 [ Dunlop ]. [ 90 ] In a related argument, FCC submits that s. 60(2) of the Personal Property Security Act requires that any surplus be paid to it. Subsection 60(2) of the Personal Property Security Act provides that “any surplus [remaining after the sale of a secured asset] shall, unless otherwise provided by law … be accounted for and paid … to: (

a) a person who has a subordinate security interest in the collateral and …

i) who, before the distribution of the surplus, registers a financing statement using the name of the debtor …”.

According to FCC, this means it is entitled to the proceeds. [ 91 ] In Dunlop , the author notes, as a matter of settled law, that the proceeds remaining after the forced sale of an exempt asset are also exempt (502): One problem which has been settled in most Canadian jurisdictions is the status of the proceeds of sale of an exempt asset. … [W]here the sale is involuntary, as in a foreclosure or a sale by a trustee in bankruptcy, and where there is a surplus over the amount required to satisfy the secured creditors, that money is payable to the debtor and [is] exempt from seizure or garnishment .

The rule has no legislative basis but appears to be derived from the early American cases and texts on the subject. (Footnotes omitted, emphasis added)

[92] In support of this proposition, Dunlop cites the following decisions: Ross v Rogers, (SK KB), [1927] 3 WWR169 at para 10 (Sask SC) (in Chambers); Reid (Re), (SK KB), [1937] 1 WWR 546 (Sask SC); and Spence v YellowheadFeeders Co-operative Ltd., (SK KB), [1994] 5 WWR 129 (Sask QB) – all of which pertain to personal property.

Seealso Rainbow Soil Services Ltd. v Kada (1995), (SK KB), 130 Sask R 154 (QB) at para 11. [93] The Farm Security Act is silent on the point, but extending an exemption from an item of personal property listed in s. 66 to theproceeds of a forced sale gives full meaning to the Legislature’s intention to create an exemption in such assets in the first place (seeNovak). Thus, in Pettyjohn, without considering whether there was any possible argument to the contrary, the majority easily concludedthat some of the proceeds of what was a voluntary sale of property that had been the subject of a PMSI were exempt.

By implication, themajority was saying that the proceeds of exempt property are also exempt. Writing in dissent, Wakeling J.A. was primarily concernedabout what he saw as the Pettyjohns’ wrongful conduct.

If the conduct had not been wrongful, he would have had no difficulty with theproposition that the surplus proceeds remaining after the sale of an exempt asset by a PMSI holder belong to the debtor. [94] Thus, this was the state of the common law in Saskatchewan before the Money Judgments Act was enacted: where surplusproceeds are generated from the forced sale of exempt tangible personal property, the proceeds – to the extent of the exemption – are alsoexempt.

This is a complete answer to FCC’s submissions raised at this point of the analysis. [95] To be clear, notwithstanding the comments made regarding Pettyjohn in this part, these reasons do not decide whether theproceeds of a voluntary sale of an asset determined to be exempt under s. 66 of the Farm Security Act are or are not exempt. That issue isnot before the Court on this appeal. 2. The Money Judgments Act applies to judgment debtors who are farmers but it cannot conflictwith the Farm Security Act [96]

Section 3 of the Money Judgments Act indicates that it applies to “all exigible property of a judgment debtor” (s. 3(2)) unlessany other Act or law provides otherwise: Application 3(1) Except as provided for in this Act or any other Act or law, all judgments shall be enforced pursuant to this Act.

(2) Except as provided for in this Act or any other Act or law, all exigible property of a judgment debtor is subject to enforcement pursuantto this Act. (Emphasis added) [97] Judgment debtor is not defined for the purposes of the Money Judgments Act, but only one provision of that Act statesspecifically that it does not apply to any “judgment debtor who is a farmer as that term is defined in

Part V of The Saskatchewan FarmSecurity Act” (s. 93(8) of the Money Judgments Act).

Section 93 and the relevant

definitions are reproduced in the appendix. [98]

Part V of the Farm Security Act defines farmer as follows:

Interpretation of

Part 65 In this Part, “farmer” means a producer who: (

a) owes payment or other performance of the obligation secured whether or not he or she owns or has rights in the goods; or (

b) is an execution debtor. The effect of s. 93(8) of the Money Judgments Act, in conjunction with s. 65 of the Farm Security Act, confirms that the exemptionsestablished by s. 93 do not apply to farmers. Instead, s. 66 of the Farm Security Act establishes what constitutes an exemption available toa farmer who is a judgment debtor under the Money Judgments Act.

It is the sole specific carve-out from the Money Judgments Act. [99] When the Money Judgments Act was passed, the Legislature amended the Farm Security Act by striking out references to TheExecutions Act, RSS 1978, c E-12, and many references to execution debtor, execution creditor, execution, writ of execution; it replacedthem with references to the Money Judgments Act, judgment debtor, judgment creditor, enforcement and judgment enforcement – all tocorrespond with the terminology of the Money Judgments Act.[3] Insofar as The Executions Act addressed questions of judgmentenforcement before the Money Judgments Act, that Act replaced The Executions Act. [100] Given that the Money Judgments Act applies to judgment debtors who are farmers, except when dealing with exempt property,the issue is whether the Legislature has taken away the common law right of a farmer to claim an exemption in money proceeds derivedfrom the forced sale of an exempt asset.

FCC argues that the Money Judgments Act has codified the rights of debtors to exempt proceeds ins. 94 and that it has omitted therein any references to s. 66 of the Farm Security Act, thereby displacing a farmer’s common law right tosurplus proceeds. (A similar argument could be made in relation to the Personal Property Security Act as s. 55 of that Act also recognizesa non-farming secured debtor’s right to proceeds in certain circumstances.) [101] FCC addresses its specific arguments to s. 94(8) of the Money Judgments Act, which provides as follows: Proceeds of exempt property 94(8) If exempt property of the judgment debtor that is subject to a security interest is sold by a person enforcing the security interest, andthat security interest has priority over all enforcement charges affecting the exempt property, the sale proceeds shall be allocated in thefollowing order:

(

a) to the holder of the security interest to the extent of the sum secured and any costs to which that person is entitled ; (

b) the balance remaining, if any, to the sheriff to be paid , subject to the rights of persons against whom exemptions may not be asserted pursuant to this Act: (

i) in the case of an item mentioned in clause 93(1)(

c) or (f), to the judgment debtor in an amount not exceeding an amount required to replace the property sold with an equivalent item of property; (ii) in the case of an item mentioned in clause 93(1)(l), to the judgment debtor in an amount sufficient to replace the item up to the prescribed amount; (iii) in the case of an item mentioned in clause 93(1)(e), to the judgment debtor in an amount not exceeding the prescribed amount mentioned in clause 93(1)(e); and (iv) except as provided in subclauses (

i) to (iii), to the judgment debtor . (Emphasis added) [ 102 ] As with the balance of s. 94 , the above provision refers to the exemptions established by s. 93 of the Money Judgments Act for the non-farming community and not to the exemptions for the farming community listed in s. 66 of the Farm Security Act . From this, FCC argues that if the Legislature had intended to protect the proceeds of exempt farming assets, it would have amended the Farm Security Act to so provide. [ 103 ] In support of this argument, FCC refers to other issues resolved by s. 94 of the Money Judgments Act .

In addition to removing the distinction between voluntary sales and forced sales in s. 94(8) , other subsections of s. 94 make further modifications to the common law, including the following: (

a) given the fungible nature of money, its exempt status is preserved by keeping it in specie or in a separate bank account (s. 94(12) and s. 94(13)); (

b) the sheriff determines what constitutes an equivalent item of property (s. 94(14)); (c)

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