Yorkton (City) v Mi-Sask Industries Ltd., 2021 SKCA 43

Court of Appeal for Saskatchewan Docket: CACV3670 Citation: Yorkton (City) v Mi-Sask Industries Ltd. , 2021 SKCA 43 Date: 2021-03-19 Between: City of Yorkton Appellant (Plaintiff) And Mi-Sask Industries Ltd., Royal Group, Inc., EMCO Corporation, Associated Engineering (Sask) Ltd. Respondents (Defendants) Before: Caldwell, Schwann and Barrington-Foote JJ.A. Disposition: Appeal allowed Written reasons by: The Honourable Mr. Justice Barrington-Foote In concurrence: The Honourable Mr.

Justice Caldwell The Honourable Madam Justice Schwann On appeal from: 2020 SKQB 183 , Yorkton Appeal heard: January 12, 2021 Counsel: Lauren Wihak, Angela Stolz and Jenna Sambrook for the Appellant Conrad Hadubiak, Q.C. and Allison Graham for the Respondents Barrington-Foote J.A. I. INTRODUCTION [ 1 ] This appeal arises as a result of an action [project claim] in which the City of Yorkton [City] claims damages from Mi-Sask Industries Ltd. [Mi-Sask] and other defendants as a result of alleged defects in the supply and installation of sewer pipe. The action was commenced by the City in 2012.

The trial is set for four weeks in March and April 2021. [ 2 ] In May 2020, the City, having learned that Mi-Sask was selling its assets and winding up its business, applied to the Court of Queen’s Bench pursuant to s. 5(5) of The Enforcement of Money Judgments Act , SS 2010, c E-9.22 [ EMJA ], for a preservation order.

On June 26, 2020, a judge of the Court of Queen’s Bench [Chambers judge] dismissed the City’s application ( 2020 SKQB 183 ) [ QB Decision ]), having concluded that the City had failed to prove that, absent a preservation order, enforcement of the judgment it sought in the project claim would likely be partially or totally ineffective. [ 3 ] The City was granted leave to appeal the QB Decision , based on alleged errors by the Chambers judge in relation to the onus of proof and the evidence required on an application for a preservation order.

For the reasons that follow, I would allow the appeal and grant a preservation order. II. BACKGROUND [ 4 ] The City claims damages in excess of $8,000,000 in the project claim, which is cast in negligence and breach of contract. On the City’s theory of the case, Mi-Sask is the defendant that was primarily responsible for its losses. [ 5 ] Mi-Sask is a small, closely-held, family-run corporation that was in the business of sewer and water construction.

Its shares are owned by holding corporations owned by three cousins – Bernie Miazga, Cynthia Kitella and Ted Miazga – who have worked in the business and are the directors of the corporation. In April 2020, the City learned that the three principals of Mi-Sask intended to retire and were winding up the corporation. In pursuit of that goal, Mi-Sask completed a dispersal auction of its equipment on April 6, 2020, realizing net proceeds of $940,000 [auction proceeds]. [ 6 ] Mi-Sask paid approximately $350,000 of the auction proceeds to retire a mortgage on its building.

It paid $237,374.76 to Ted Miazga and Cynthia Kitella to enable them to pay out mortgages on their homes, which had been granted as security for funds they had borrowed personally to lend to Mi-Sask. Mi-Sask also paid $12,000 to Bernie Miazga for funds he had advanced to Mi-Sask. Approximately $100,000 was used to pay wages to the directors and for other miscellaneous expenses.

The amount remaining from the auction proceeds after all of these payments was $327,906.01. [ 7 ] On May 8, 2020, the City filed a without notice application for a preservation order, claiming that urgent relief was required to prevent serious harm to the City. On May 15, 2020, the Chambers judge granted an interim order [interim order] which, among other things, prohibited further payments by Mi-Sask for shareholder loans or for professional fees and disbursements incurred to defend the project claim.

On June 15, 2020, Mi-Sask closed the sale of its building, realizing net proceeds of $1,209,032.86 [building proceeds]. As of that date, Mi-Sask retained $1,500,000 from the auction proceeds and the building proceeds. [ 8 ] As to the fees that would be incurred by Mi-Sask in relation to the project claim, Bernie Miazga’s June 2, 2020, affidavit contained the following evidence relating to insurance – evidence that would be the keystone of the decision of the Chambers judge: 17. In these proceedings, Mi-Sask has insurance coverage.

However, the insurer does not and will not cover every professional fee and disbursement associated with these proceedings. Where the insurer does not do so, Mi-Sask must pay its own professional fees and

disbursements in order to defend and respond to issues arising in this action. [ 9 ] As noted above, the QB Decision dismissing the City’s application issued June 26, 2020.

Two weeks later, on July 10, 2020, the City applied to this Court for leave to appeal the QB Decision and for an order that Mi-Sask be restrained from disbursing further funds pending the determination of its appeal. [ 10 ] In her August 4, 2020, affidavit filed in response to that application, Cynthia Kitella averred that Mi-Sask had paid salaries, shareholder loans, legal fees and business expenses in the amount of $850,509.07 between June 12 and July 28, 2020.

Almost all of those payments were made after the QB Decision issued, including $424,000 paid to the family members’ holding corporations, two payments to MLT Aikins LLP, being $39,394.26 for an account payable and $50,000 in trust. Ms. Kitella deposed that this left Mi-Sask with $952,360.89 as of July 30, 2020, which Mi-Sask intended to “set aside for the lawsuit in the event judgment was rendered against Mi- Sask”, except amounts the company intended to pay to creditors.

The expenses she identified as falling within the latter category were taxes and other government fees and charges; ongoing business expenses such as utilities, insurance, payroll, bank and financial charges; professional fees, disbursements and other costs relating to the winding up of Mi-Sask (referring to the disposition of assets and the dissolution of the corporation); and legal fees and disbursements incurred to respond to the appeal of the QB Decision .

Mi-Sask has no prospect of acquiring or generating additional assets. [ 11 ] The City’s application for leave to appeal was granted by Schwann J.A. on September 8, 2020 ( Yorkton (City) v Mi-Sask Industries Ltd. , 2020 SKCA 109 ). Justice Schwann also made an order restraining Mi-Sask from disbursing any funds pending the hearing of the appeal, except for the following purposes: (

a) to pay the outstanding balance owing to any creditor that holds or held a security interest in any of the assets sold; (

b) to pay any and all amounts owing to federal, provincial or municipal authorities for any taxes, withholdings, remittances or other charges; (

c) to pay the outstanding balance of any amount owing to any creditor of Mi-Sask Industries Ltd. as of May 11, 2020; (

d) to pay Mi-Sask Industries Ltd.’s ongoing business expenses, including but not limited to salaries, benefits and other remuneration for its employees, bank and financial charges, utility expenses, insurance and any other expenses incurred in the ordinary course; (

e) to pay all professional fees, disbursements and other costs relating to the ongoing operation of Mi-Sask Industries Ltd. or its winding up; and (

f) to pay the legal fees and disbursements incurred by Mi-Sask Industries Ltd. in responding to the City’s appeal. (at para 47) III. THE DECISION UNDER APPEAL [ 12 ] In the QB Decision , the Chambers judge briefly outlined the facts relating to the decision by the directors of Mi-Sask to dispose of its assets and to pay shareholder loans and other debts with the proceeds. He specifically noted Bernie Miazga’s evidence that the remaining proceeds would be set aside for the lawsuit.

He then found as follows (at para 8): Based on these facts, the court finds that in selling the entirety of its assets, Mi-Sask has exchanged equipment and land for money on hand, a more accessible form of property to a judgment creditor than either equipment or land. The City has [not] objected to the sale of assets or suggested that the sales were improvident or sold to other than arm’s length, bona fide purchasers for fair market value. [ 13 ] The Chambers judge turned next to the

interpretation of s. 5(5) of the EMJA . He noted, citing Ronald C.C. Cuming & Donald H. Layh, Q.C. (as he then was) in The Saskatchewan Enforcement of Money Judgments Act: Commentary and Analysis (Regina: Office of the Queen’s Printer, 2012) [ EMJA Commentary ], that a plaintiff need not show that the defendant intends to avoid judgment enforcement and that, in any event, there had been no suggestion that Mi-Sask had engaged in such conduct. As he put it, “[t]he only conduct in play is Mi-Sask’s ‘disposition of’ property: it voluntarily sold land and equipment” (at para 10).

He again noted Mi-Sask’s evidence that the money remaining after paying shareholder loans and funding defence expenses would be held to satisfy any judgment that might issue. [ 14 ] The Chambers judge then commented that, if the purpose of a disposition falls within one of the three exceptions specified in s. 5(5)(b) [three exceptions], the court does not inquire whether judgment enforcement might be partially or wholly ineffective. Rather, as he put it, a disposition for any of those reasons is “excepted from any preservation order” (at para 11).

On that basis, he concluded that Mi- Sask’s stated intention to preserve the sale proceeds after paying shareholder loans and funding the expenses of defending the project claim would be consistent with the terms of a preservation order of the sort contemplated by s. 5(6)(a); that is, an order prohibiting the disposition of property other than for a purpose mentioned in s. 5(5) (b). [ 15 ] With this foundation in place, the Chambers judge dealt with the issue of onus or burden.

He posed this question (at para 14): how does a plaintiff prove that the defendant’s dealings with its property will likely make judgment enforcement partially or totally ineffective, when knowledge as to the ability to pay will often rest solely with the defendant?

He noted that question was addressed in Saskatchewan Crop Insurance Corporation v Avramenko , 2014 SKQB 96 , 436 Sask R 179 [ Avramenko ], where Mills J. concluded that the appropriate balance would be achieved if the plaintiff is obliged to establish, on a prima facie basis, that enforcement would likely be partially or wholly ineffective if the order is not granted. As the Chambers judge noted, the City agreed that it bore this onus. [ 16 ] The Chambers judge concluded that, but for Bernie Miazga’s evidence of insurance, it was obvious Mi-Sask would be unable to satisfy a judgment in favour of the City.

He also acknowledged that the evidence of insurance was adduced “in the context of seeking an exception to a preservation order to fund the expenses of defending the action” (at para 17); that is, it had not been led to demonstrate there was insurance to pay the judgment that might be awarded. He nonetheless found that the City had failed to discharge its onus of

proof, as it had failed to provide sufficient evidence as to the terms of that insurance: [18] Because the City accepts the onus of proving that enforcing its judgment may be partially or wholly ineffective, and because the City realizes that Mi-Sask has insurance to cover the claim against it, the court questions why the City has not adduced evidence to determine the extent of Mi-Sask’s insurance coverage. For example, the City has not sought to cross-examine Mr.

Miazga to establish the extent of insurance coverage if Mi-Sask is found liable, either the limit of insurance or the amount of any deductible. [19] …[T]his application…is about the likelihood that a judgment may remain unsatisfied. Therefore, the existence of insurance is relevant to a disputed fact, namely whether the enforcement of the City’s judgment is likely to be partially or totally ineffective if the $1,000,000 is not subject to a preservation order.

Knowing that Mi-Sask has insurance coverage, but not knowing the terms of that insurance, leaves this critical question unanswered. [20] Although the City has accepted the onus of proving that its judgment enforcement measures will be thwarted in the absence of a preservation order, it has not discharged this onus. As Justice Mills stated in Avramenko and as the City has expressly acknowledged, the onus of proving that judgment enforcement will be partially or wholly ineffective lies with the plaintiff, regardless that such evidence may be challenging to bring before the court.

But this proof is the essential starting point for the court. Then, if satisfied that a preservation order is prima facie justified, the onus must necessarily switch to the defendant to prove one or all of the conditions in ss. 5(5) (b)(i), (ii) or (iii). [ 17 ] The Chambers judge also noted that Mi-Sask had taken the position that it should be able to retain ample funds to cover litigation expenses, but had failed to provide evidence as to its needs, including evidence as to the extent to which the insurance policy would cover its legal expenses.

He commented that the “onus of proof” would have shifted to Mi-Sask if a preservation order had been “ prima facie justified” (at para 21). As such, he found that he was “somewhat hamstrung in determining the merits of either party’s claim given the dearth of evidence, both by the City and by Mi-Sask” (at para 21). [ 18 ] In the result, the Chambers judge denied the City’s application for a preservation order. However, he dealt briefly with several other issues. He did not do so in the alternative, but in comments that he expressly described as obiter .

I will, to the extent those obiter comments touch matters which must be decided on this appeal, refer to them below. IV. ISSUES AND STANDARD OF REVIEW [ 19 ] Justice Schwann granted leave to appeal in relation to the three issues identified in the notice of appeal. Having had the benefit of the parties’ representations on the appeal proper, I would restate the issues to be decided as follows: (

a) Did the Chambers judge err in law as to the burden of proof borne by an applicant for a preservation order pursuant to s. 5(5) of the EMJA ? (

b) Did the Chambers judge commit an error of law or mixed fact and law by deciding the City was obliged to provide further evidence as to Mi-Sask’s insurance coverage relating to the underlying action? (

c) Did the Chambers judge err by failing to grant a preservation order as a result of committing the specified errors? [ 20 ] The

interpretation of the EMJA , including as to the incidence and nature of the evidential burden and the persuasive burden on an application for a preservation order, is a question of law. In that respect, the Chambers judge’s decision is subject to review on a correctness standard: Housen v Nikolaisen , 2002 SCC 33 , [2002] 2 SCR 235; and Arslan v Şekerbank T.A. Ş. , 2018 SKCA 77 at para 43 , 38 CPC (8th) 311 [ Arslan 2018 ]. [ 21 ] The decision as to whether and on what terms a preservation order should be granted, on the other hand, is discretionary [ Arslan 2018 ].

The standard of review applicable to discretionary decisions is deferential, and reflects the fundamental principle that, as Cameron J.A. said in Rimmer v Adshead , 2002 SKCA 12 at para 58 , [2002] 4 WWR 119, discretionary powers “fall to be exercised as the judge vested with them thinks fit, having regard for such criteria as bear upon their proper exercise”.

The proper scope for appellate intervention on an appeal of a discretionary decision was summarized in Kot v Kot , 2021 SKCA 4 [ Kot ]: [20] …[A]ppellate intervention in a discretionary decision is appropriate where the judge made a palpable and overriding error in their assessment of the facts, including as a result of misapprehending or failing to consider material evidence. Appellate intervention is also appropriate where the judge failed to correctly identify the legal criteria which governed the exercise of their discretion or misapplied those criteria, thereby committing an error of law.

Such errors may include a failure to give any or sufficient weight to a relevant consideration. See also Saskatoon (City) v The Canadian Nationalist Party Inc. , 2021 SKCA 22 at para 31 . [ 22 ] This is an appeal of a decision based on affidavit evidence. There has been some inconsistency in the case law as to the standard of review relating to findings of fact in those circumstances.

There is Saskatchewan authority for the proposition that the applicable standard of review is reasonableness: see Valley Beef Producers Co-operative Ltd. v Farm Credit Corporation , 2002 SKCA 100 at paras 117–118 , 218 DLR (4th) 86 [ Valley Beef ]; and Arslan v Şekerbank T.A. Ş . 2016 SKCA 77 at para 50 , 400 DLR (4th) 193 [ Arslan 2016 ]. In Nelson (City) v Mowatt , 2017 SCC 8 at para 38 , [2017] 1 SCR 138 [ Mowatt ], on the other hand, the Supreme Court of Canada applied the palpable and overriding error standard.

Mowatt is consistent with the reasoning in, for example, H.L. v Canada (Attorney General) , 2005 SCC 25 at paras 52–56 , [2005] 1 SCR 401 [ H.L. ], and Canada (Attorney General) v Bedford , 2013 SCC 72 at paras 54–56 , [2013] 3 SCR 1101 [ Bedford ]. In Bedford , the Court confirmed that absent express statutory instruction, there is no “middling” standard of review and that the palpable and overriding standard applies to adjudicative, social and legislative facts.

Bedford was a s. 7 Charter appeal, based on a record made up of affidavit evidence. [ 23 ] In Boechler v Boechler , 2019 SKCA 120 at para 25 , 34 RFL (8th) 13 [ Boechler ], this Court noted the difference between the

language used in Valley Beef and in Mowatt may create uncertainty as to the standard of review relating to findings of fact based onaffidavit evidence, but did not find it necessary to pursue the issue. Frondall v Frondall, 2020 SKCA 135 at para 23 [Frondall], alsoreferred to this difference and suggested that the Valley Beef line of authority is doubtful in light of Mowatt.

The Court again found itunnecessary to further address the matter, as there was no affidavit evidence in issue. [24] In Archibald v Archibald, 2018 SKCA 86 at para 38 [Archibald], on the other hand – where findings based on affidavitevidence were at issue – Jackson J.A. noted that while there may be no practical difference between these two formulations of thestandard of review, Mowatt had made it clear that “palpable and overriding error” is the correct expression of the standard.

That standardhas also been applied in other decisions of this Court: see, for example, Deren v SaskPower, 2017 SKCA 104 at para 41 [Deren]; andThomas v Quinlan, 2020 SKCA 82 at para 30, 64 MVR (7th) 175 [Thomas]. [25] In my opinion, Archibald, Deren and Thomas are correct. The palpable and overriding error standard of review applies on anappeal of a finding of fact based on affidavit evidence, as it does if the evidence was viva voce.

Kot affirmed that standard in the context ofan appeal of a discretionary decision, without distinguishing between affidavit and viva voce evidence. [26] As noted above, Archibald raises the interesting question of whether there is a “practical difference” between describing thestandard of review as palpable and overriding error and reasonableness. Is the former a more demanding or different standard than thelatter?

The following comments by Fish J. in H.L. are of interest in this context: [55] “Palpable and overriding error” is at once an elegant and expressive description of the entrenched and generally applicablestandard of appellate review of the findings of fact at trial. But it should not be thought to displace alternative formulations of thegoverning standard. In Housen, for example, the majority (at para. 22) and the minority (at para. 103) agreed that inferences of fact at trialmay be set aside on appeal if they are “clearly wrong”.

Both expressions encapsulate the same principle: an appellate court will notinterfere with the trial judge’s findings of fact unless it can plainly identify the imputed error, and that error is shown to have affected theresult. [56] In my respectful view, the test is met as well where the trial judge’s findings of fact can properly be characterized as“unreasonable” or “unsupported by the evidence”. … See to the same effect McNabb v Cyr, 2017 SKCA 27 at para 34. [27] This reasoning suggests there may be no difference between describing this standard of review as palpable and overriding erroror describing it as an unreasonable finding that affected the result.

However, the very strong language that has sometimes been used todescribe palpable and overriding error weighs against this perspective, or at a minimum, calls for reconciliation. I refer here, for example,to such evocative turns of phrase as the comparison of palpable and overriding error to a “beam in the eye” by Morissette J.A. in J.G. vNadeau, 2016 QCCA 167 at para 77, and Stratas J.A.’s statement in Canada v South Yukon Forest Corporation, 2012 FCA 165 at para46, 431 NR 286, that “[w]hen arguing palpable and overriding error, it is not enough to pull at leaves and branches and leave the treestanding.

The entire tree must fall”. [28] In this case, nothing turns on the question of whether describing the standard of review as “palpable and overriding error”rather than “reasonableness” might generate different results. Accordingly, that issue can be deferred to another day. V. ANALYSIS A. Did the Chambers judge err in law as to the burden of proof borne by anapplicant for a preservation order pursuant to s. 5(5) of the EMJA? 1. The evidential and persuasive burden [29] The answers to the first and second grounds of appeal turn on the

interpretation of s. 5(5) of the EMJA. More specifically, theCity alleges that the Chambers judge erred in identifying the burden of proof imposed on an applicant for a preservation order by s. 5(5)and, as a result, erred in deciding that the City had not discharged that burden. [30] To address those allegations, it is useful to first distinguish between the evidential burden and persuasive burden, which differin substance. The phrase “burden of proof” is often used to describe both of these concepts: Sidney N. Lederman, Alan W. Bryant &Michelle K.

Fuerst, The Law of Evidence in Canada, 4th ed (Markham, Ont: LexisNexis Canada, 2014) at 87–89 [Sopinka]. [31] A party that bears the evidential burden in relation to an issue must either adduce or point to evidence on the record that issufficient to raise the issue.

As such, absent a rule of law that provides that certain evidence constitutes proof – such as an analyst’scertificate admitted in evidence pursuant to s. 51 of the Controlled Drugs and Substances Act, SC 1996, c 19 – the fact the evidentialburden has been satisfied does not mean that the court must decide in favour of the party that bears that burden. Rather, if the evidencemeets the evidential burden, the trier of fact can decide the issue, in accordance with the applicable standard of proof: Sopinka at 100; andR v Schwartz, (SCC), [1988] 2 SCR 443 at 467.

If it does not meet the evidential burden, the party attempting to provethat fact or issue will have failed to do so. [32] Further, the fact that a party bears the evidential burden does not mean it must itself adduce the necessary evidence. It may beadduced by another party. The court will decide on the evidence it has that is relevant and can properly be considered in relation to a factor issue, regardless of its source. [33] The phrase “burden of proof” is also sometimes used when referring to the persuasive burden, which is at times called the legalburden or ultimate burden: Sopinka at 87.

The party that bears the persuasive burden in relation to an issue must prove it to the criminal orcivil standard of proof. Absent legislation to the contrary, the criminal standard is proof beyond a reasonable doubt and the civil standard

is proof on a balance of probabilities. If the party with the persuasive burden fails to prove a matter at issue to the relevant standard, theywill lose on that issue: Sopinka at 90 and 92. [34] However, the question of who bears the persuasive burden is generally of no moment in a civil proceeding. Simply put, if thetrier of fact can reach a conclusion in relation to an issue, the persuasive burden does not play a

part in the decision-making process. It isonly if the judge cannot reach a conclusion because the evidence is so evenly balanced that the persuasive burden becomes relevant. Inthose circumstances, the party that bears but has failed to discharge the persuasive burden will lose on that issue: Cop v SaskatchewanGovernment Insurance, 2019 SKCA 75 at para 53, [2019] 2 WWR 396. 2. Section 5(5) of the EMJA:

Interpretation [35] With this background in mind, I turn next to the

interpretation of s. 5(5) of the EMJA to identify the burden of proof on anapplication for a preservation order. That

interpretation must be in accordance with the modern principle adopted in Rizzo & Rizzo ShoesLtd. (Re), (SCC), [1998] 1 SCR 27, and codified in The Legislation Act, SS 2019, c L-10.2, s 2-10: 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. … Further, s. 2-10(2) of The Legislation Act requires that all legislation be construed as remedial and be given the fair, large and liberalinterpretation that best ensures the attainment of its objects. [36] The interpretive process must begin with and be faithful to the words chosen by the Legislature. Section 5(5) defines theconditions that must be met for the court to grant a preservation order:

(5) The court may grant a preservation order if the court is satisfied that: (

a) the action would, if successful, result in: (

i) a judgment in favour of the plaintiff; … (

b) if the preservation order is not granted, the enforcement of a judgment or order against the defendant or transferee is likely to bepartially or totally ineffective as a result of the disposition of, damage to, dissipation of, destruction of, concealment of or any dealing withproperty, other than disposition for the purposes of: (

i) meeting reasonable living expenses of the defendant and dependants of the defendant; (ii) carrying on the business of the defendant in the ordinary course; or (iii) acquiring income to pay the expenses of defending or responding to the action; and (

c) the action will be prosecuted without delay, other than delay caused by the defendant or transferee. [37] The key phrase in this provision relating to the burden of proof appears in the introductory language of s. 5(5); that is, apreservation order may be granted “if the court is satisfied” as to the conditions that follow. The grammatical and ordinary sense of thephrase “if the court is satisfied” is that the court must conclude or be convinced that the conditions specified in ss. 5(5)(a), (

b) and (c)exist. See, for example, Langseth Estate v Gardiner (1990), (MB CA), 75 DLR (4th) 25 (Man CA) at 34; and R vClymore (1992), (BC SC), 74 CCC (3d) 217 (BCSC) at 238. That is consistent with the dictionary definition. TheCambridge Dictionary (online), for example, defines “satisfy” in this context as “to make someone believe that something is true”. TheMerriam-Webster Dictionary (online) defines “satisfied” in this context as “persuaded by argument or evidence”. [38] Applied to s. 5(5)(b), which is the issue in this case, this would mean that a judge can grant a preservation order only if theyhave concluded that all of the following criteria have been met: (

a) it is likely enforcement of a judgment or order will be partially or totally ineffective if an order is not granted; (

b) that ineffectiveness will result from damage to, disposition, dissipation, destruction, or concealment of, or any dealing withproperty; and (

c) that ineffectiveness will not result from a disposition of property for a purpose specified in s. 5(5)(b)(i), (ii), or (iii). [39] Cast in terms of “burden” or “onus”, the requirement to convince the judge that these conditions exist is the persuasive burden.That would mean the judge must be convinced on the civil burden, being a balance of probabilities. [40] How, then, does this conclusion compare to the case law? As is noted above, Mills J. held in Avramenko that the onus ofsatisfying the court of the circumstances specified in s. 5(5)(

b) obliged the plaintiff to establish those circumstances “on a prima faciebasis” (at paras 26 and 30). He described that obligation as an “initial onus…on the plaintiff to provide evidence that the enforcement ofthe judgment is likely to be partially or totally ineffective if the requested order is not granted”, and as the “evidentiary threshold” toestablish those circumstances (at para 30).

He said that if the plaintiff meets this standard, “the court would be in a position to grant theorder” (at para 26) and that the onus would shift to the defendant to “respond to its abilities to satisfy the judgment” (at para 33). [41] With two exceptions, I agree with Mills J.’s characterization of what he called the evidentiary threshold. First, it is potentiallyconfusing to speak of a shifting onus in this context. At most, the defendant could be said to bear a “common sense” or “tactical” burden –as opposed to a legal burden – to adduce evidence once the evidential burden has been met.

However, that “burden” does not arise because

the defendant must either lead such evidence or lose. Rather, it exists because the court will make the decision based on the evidence ithas, and evidence that would weigh against the plaintiff’s case would improve the defendant’s prospects of success. I note the usefuldiscussion of this issue in Sopinka at pages 108–114, including the comments relating to Snell v Farrell, (SCC), [1990] 2SCR 311 [Snell].

In Snell at pages 329–330, Sopinka J. commented on the notion that there are shifting burdens in a medical malpracticeclaim: …I find it preferable to explain the process without using the term secondary or evidential burden. It is not strictly accurate to speak of theburden shifting to the defendant when what is meant is that evidence adduced by the plaintiff may result in an inference being drawnadverse to the defendant. Whether an inference is or is not drawn is a matter of weighing evidence. The defendant runs the risk of anadverse inference in the absence of evidence to the contrary.

This is sometimes referred to as imposing on the defendant a provisional ortactical burden. See Cross, op. cit., at p. 129. In my opinion, this is not a true burden of proof, and use of an additional label to describewhat is an ordinary step in the fact-finding process is unwarranted. [42] It is important to note here that we are not concerned with proof of an assertion by a defendant that a proposed dispositionwould fall within one of the three exceptions.

A defendant making that assertion would bear the persuasive burden; that is, the burden ofproving that the exception applied on a balance of probabilities. [43] My second concern is that Mills J. describes the burden of making out a prima facie case as the plaintiff’s onus. This statementis understandable, but only in the sense that it is the applicant that seeks relief, and that relief cannot be granted if the evidence does notconstitute a prima facie case. However, as is noted above, the evidential burden can be met regardless of whether the plaintiff has adducedsufficient evidence.

The issue is whether there is sufficient evidence on the record, whatever the source, to raise the issue and thus enablethe court to decide. To that extent, the description of this as an “onus” and “burden” that must be met by the plaintiff can be misleading. [44] With those qualifications, it is my view that Mills J. was correct. That is so because I have concluded that he was speaking tothe evidential burden, rather than the persuasive burden.

Although his analysis is not entirely clear on the point, it is telling that hedescribes this burden as an “initial onus…on the plaintiff to provide evidence” and as an “evidentiary threshold” (at para 30). Further, hedoes not say the court must grant an order if such evidence is adduced, but rather, that “the court would be in a position to grant the order”(at para 26, emphasis added). This discloses that when he concluded there is an obligation to establish the relevant circumstances on aprima facie basis, Mills J. meant that there must be sufficient evidence to enable the judge to decide.

That correctly described theevidential burden relating to the criteria that must be proved on a s. 5(5) application. He found the evidence did not meet that mark inAvramenko. I am unable to conclude that he took the extraordinary step of finding that the usual persuasive burden that applies in civilcases does not apply here.

Rather, Mills J. did not deal with the issue of the persuasive burden. [45] Avramenko has been repeatedly cited with approval in the Court of Queen’s Bench: see, for example, Şekerbank T.A.Ş. vArslan, 2014 SKQB 215 at paras 41–44, 450 Sask R 76; Alliance Pulse Processors Inc. v Hudson Bay Port Company, 2016 SKQB 307 atpara 8; and Custom Foundations Ltd. v Welcome Homes Ltd., 2017 SKQB 148 at paras 24–27 [Custom Foundations]. However, none ofthese nor any other case of which I am aware has distinguished between the evidential burden and the persuasive burden on an applicationpursuant to s. 5(5).

Put differently, none have discussed whether the fact there is evidence that is sufficient to constitute a prima facie casemeans the judge may exercise their discretion to grant relief, without having first decided they are convinced or persuaded by thatevidence. [46] However, Arslan 2016 is of assistance. That appeal was from the refusal of an application to terminate a preservation orderpursuant to s. 8 of the EMJA, which deals with applications to preserve, extend, renew, modify or terminate an order.

Section 8, whichspeaks directly to the onus on such an application, provides as follows: 8(1) A plaintiff, judgment creditor, defendant, judgment debtor or any other person affected by a preservation order may apply to the courtto have the preservation order extended, renewed, modified or terminated.

(2) Section 5 applies, with any necessary modification, to an application made pursuant to this section.

(3) In an application to extend, renew, modify or terminate a preservation order, the onus is on the applicant to establish that thepreservation order should be extended, renewed, modified or terminated. … [47] Justice Caldwell described the nature of this onus on the applicant: [102] …The Legislature has indicated in s. 8(3) that the applicant who seeks to have a preservation order terminated bears the onus ofestablishing that the order ought to be terminated.

From this policy choice (contrast s. 4 of the draft legislation in the Final Report at page27 with the language of s. 8(3) of the EMJA), I infer the Legislature intended to require applicants to prove to the satisfaction of achambers judge — which must be on a balance of probabilities — that there had been some relevant change in circumstances sufficient towarrant termination of a preservation order. (Emphasis in original) [48] The conclusion that the usual civil standard applies on an application pursuant to s. 8 is highly persuasive authority that thesame standard applies on application pursuant to s. 5(5).

Self-evidently, these are closely related provisions, and both call for the applicantto “establish” the necessary conditions. Justice Caldwell’s statement that the standard must be on a balance of probabilities is alsoconsistent with Rothstein J.’s emphatic statement in F.H. v McDougall, 2008 SCC 53, [2008] 3 SCR 41, as to the persuasive burden incivil cases: [40] Like the House of Lords, I think it is time to say, once and for all in Canada, that there is only one civil standard of proof atcommon law and that is proof on a balance of probabilities.

Of course, context is all important and a judge should not be unmindful,where appropriate, of inherent probabilities or improbabilities or the seriousness of the allegations or consequences. However, theseconsiderations do not change the standard of proof.

See also Harvard Developments Inc. v Park Manor Condominium Corporation, 2018 SKCA 81 at para 75, [2019] 2 WWR 227. [49] In Mowatt, which related to a historical claim of adverse possession, Brown J. explained both the single persuasive standard ofproof in civil cases and the potential significance of context in determining whether there is sufficient evidence to meet that standard: [40] I do not take the Court of Appeal to have espoused or applied a standard of proof other than the balance of probabilities.

Theimpugned statements go not to the standard of proof, but to the quality of evidence by which that standard is to be met. This Court saidin McDougall (at para. 46) that “evidence must always be sufficiently clear, convincing and cogent”. Those are relative, not absolutequalities. It follows that the quality of evidence necessary to meet that threshold so as to satisfy a trier of fact of a proposition on a balanceof probabilities will depend upon the nature of the claim and of the evidence capable of being adduced (Delgamuukw v.

British Columbia, (SCC), [1997] 3 S.C.R. 1010, at para. 82; Canada (Attorney General) v. Fairmont Hotels Inc., 2016 SCC 56, [2016] 2S.C.R. 720, at para. 36). In the context of historical adverse possession claims, the quality of the supporting evidence must merely be “assatisfactory as could reasonably be expected, having regard to all the circumstances” (Anglin J., as he then was, in Tweedie v.

TheKing (1915), (SCC), 52 S.C.R. 197, at p. 220; see also Sir Arthur Wilson in Attorney-General for British Columbia v.Canadian Pacific Railway, [1906] A.C. 204 (P.C.), at pp. 209-10). [50] It is of interest that both parties take the position on this appeal that an applicant for a preservation order should not be obligedto prove its case on a balance of probabilities. As in the Court of Queen’s Bench, both submit that the applicant need only demonstrate aprima facie case.

In support of this position, the appellants emphasize that applications for preservation orders can be brought withoutnotice; that preservation order proceedings are intended to be

summary; and that a plaintiff seeking a preservation order must agree to notunduly delay the proceedings. They, like the case law, correctly point out that the plaintiff will generally have limited information as tothe defendant’s ability to pay a judgment. In their view, these considerations weigh against the application of the usual civil standard. [51] For the reasons explained above, I do not agree.

That said, the imbalance in access to the evidence relevant to an application fora preservation order, and the importance of ensuring that applications for preservation orders are dealt with expeditiously, are importantconsiderations. They relate to the purpose of preservation orders in the context of the EMJA and, for that reason, have properly been takeninto account in the

interpretation of s. 5(5). However, it is not necessary to adopt a different standard of proof to account for those factors.As Brown J. pointed out in Mowatt, there is a distinction between the standard of proof and the quality of the evidence required to meetthat standard.

To reiterate, “the quality of evidence necessary to meet that threshold so as to satisfy a trier of fact of a proposition on abalance of probabilities will depend upon the nature of the claim and of the evidence capable of being adduced” (at para 40). [52] Canada (Attorney General) v Fairmont Hotels Inc., 2016 SCC 56, [2016] 2 SCR 720, demonstrates the application of thisprinciple in relation to the evidence required on a claim for rectification of a written agreement, where the criminal standard once applied.Justice Brown’s reasoning was to the same effect as in Mowatt and explained why the nature of a rectification claim required evidence of aparticular quality: [36] …A party seeking rectification faces a difficult task in meeting this standard, because the evidence must satisfy a court that thetrue substance of its unilateral intention or agreement with another party was not accurately recorded in the instrument to which itnonetheless subscribed.

A court will typically require evidence exhibiting a high degree of clarity, persuasiveness and cogency beforesubstituting the terms of a written instrument with those said to form the party’s true, if only orally expressed, intended course of action.This idea was helpfully encapsulated, in the context of an application for rectification of a common mistake, by Brightman L.J. in ThomasBates & Son Ltd. v.

Wyndham’s (Lingerie) Ltd., [1981] 1 W.L.R. 505 (C.A.), at p. 521: The standard of proof required in an action of rectification to establish the common intention of the parties is, in my view, the civilstandard of balance of probability. But as the alleged common intention ex hypothesi contradicts the written instrument, convincing proofis required in order to counteract the cogent evidence of the parties’ intention displayed by the instrument itself.

It is not, I think, thestandard of proof which is high, so differing from the normal civil standard, but the evidential requirement needed to counteract theinherent probability that the written instrument truly represents the parties’ intention because it is a document signed by the parties. [53] A judge hearing an application for a preservation order can take account of the nature of such an application and the evidencethat a plaintiff is capable of adducing. The manner in which those factors will impact the judge’s reasoning will depend on thecircumstances of the case.

A defendant will frequently have exclusive or, at a minimum, far better access to the financial and otherinformation relevant to an application for a preservation order. That would weigh in favour of a less stringent approach when determiningwhether the evidence is sufficiently clear and persuasive to make the plaintiff’s case.

From the defendant’s perspective, this could becharacterized as resulting in a tactical burden on the defendant to lead better evidence, such as evidence as to the extent and confirmationof insurance coverage; evidence of other assets, cash flow and revenue; and evidence of anticipated expenditures. However, there will alsobe occasions where the plaintiff has or has ready access to the necessary information. [54] This analysis is not intended to suggest that the ability to access relevant evidence is the only relevant circumstance in thiscontext.

The potential impact of a likely shortfall in judgment enforcement or of a preservation order being granted are other examples.Further, I would emphasize that mere allegations that enforcement may be ineffective are not enough. Evidence of a likely shortfall isrequired.

The case law relating to s. 5(5) and s. 8 has correctly stressed that requirement. [55] The contextual approach described in Mowatt maintains the usual civil standard, and enables the court to balance the rights andinterests of the plaintiff and the defendant, an issue which was referred to by Caldwell J.A. in Arslan 2016: [77] In the later work The Saskatchewan Enforcement of Money Judgments Act: Commentary and Analysis, (Regina: Office of theQueen’s Printer, 2012) [EMJA Commentary], Professor Ronald C.C. Cuming and Donald H.

Layh, Q.C. (as he then was) make thefollowing statements in general about the statute (at page 18): ¶5[4]

Part II provides an asset preservation remedy that employs within a statutory framework the basic approach of the MarevaInjunction. It embodies the assumption that a balance between the need to ensure that assets are not put out of the reach of judgmentenforcement measures before those measures can be invoked, on the one hand, and the need to protect defendants’ and third parties’property rights, on the other, can best be achieved through discretionary judicial intervention exercised within clear statutory

parameters. However, a preservation order available under

Part II reflects the functional effect of an equitable injunction, without invoking all of the concepts and uncertainty associated with it. Undoubtedly, the use of Mareva Injection [ sic ] in the context of money judgment enforcement has been completely pre-empted by the integrated and balanced system of

Part II. [ 56 ] In the result, I conclude that while the evidential burden on a s. 5(5) application is that the plaintiff must adduce or point to evidence that constitutes prima facie proof of the conditions noted above, the persuasive burden is proof that those conditions exist on a balance of probabilities. If the court is unable to conclude on a balance of probabilities that those conditions exist, the plaintiff will not succeed. 3. Did the Chambers judge err as to the evidential burden or the persuasive burden? [ 57 ] The reasoning of the Chambers judge in relation to onus was relatively brief.

He cited Avramenko for the proposition that the plaintiff must establish a prima facie case. However, he did not describe this as an initial evidentiary onus or an evidentiary threshold that must be met, or – understandably in light of the case law – did not distinguish between the evidential and persuasive burdens. Let me explain. [ 58 ] The Chambers judge found as follows: [17] Respecting this issue, the court knows that Mi-Sask currently has approximately $1,000,000 available, but apparently no further assets.

On the other hand, the City states that its quantum of damages is in excess of $8,046,121.10, resulting in Mi-Sask’s obvious inability to satisfy the judgment if the City would be successful in its claim . … (Emphasis added) [ 59 ] Having made this finding of fact, the Chambers judge held that the evidence of insurance raised a critical question as to whether the insurance might provide coverage to satisfy a judgment.

He found that the lack of evidence as to the terms of the insurance left that question unanswered and that the City had accordingly failed to discharge “ the onus of proving that judgment enforcement will be partially or wholly ineffective” (at para 20, emphasis added). He then described the operation of the onus to establish a prima facie case as follows: [20] …But this proof is the essential starting point for the court.

Then, if satisfied that a preservation order is prima facie justified , the onus must necessarily switch to the defendant to prove one or all of the conditions in ss. 5(5) (b)(i), (ii) or (iii). (Emphasis added) [ 60 ] Unlike the reasoning in Avramenko , this statement cannot reasonably be interpreted as relating to the evidential burden. It is concerned with proof . Indeed, it posits that proof by the plaintiff is the “starting point”. To reiterate, the evidential burden is not concerned with proof in this sense.

The fact the evidential burden has been met does not mean the fact or issue has been proven, with the result that the onus “necessarily” shifts to the defendant. It means only that there is sufficient evidence to permit the court to decide, based on the correct standard of proof, that the plaintiff has proven what it is obliged to prove. Here, that standard is proof on a balance of probabilities. It is not a prima facie case. [ 61 ] With the greatest respect, I conclude that the Chambers judge failed to distinguish between the evidential burden and the persuasive burden.

As a result, he erred in law as to the nature and operation of the burden of proof. Differently put, he erred in law by concluding that, absent evidence to the contrary, prima facie evidence or prima facie proof on an application for a preservation order results in a compelled fact determination, rather than a permissible fact determination.

Although the phrases prima facie evidence and prima facie proof have sometimes and somewhat confusingly been used as meaning a compelled fact determination in the case law (see the discussion of this point in Sopinka at 100–107), that is not the sense in which I have used it in these reasons. [ 62 ] Further, to the extent the QB Decision appears to hold that the plaintiff must adduce the evidence to establish a prima facie case, I would reiterate that the plaintiff can either adduce or point to evidence that meets that standard, however it was adduced.

Finally, the burden of proof does not shift from the plaintiff to the defendant once the evidential burden has been met. The plaintiff continues to bear the persuasive burden to prove its case. B. Did the Chambers judge commit an error of law or mixed fact and law by deciding the City was obliged to provide further evidence as to Mi-Sask’s insurance coverage relating to the underlying action? [ 63 ] The Chambers judge’s decision turned on the evidence of Mi-Sask’s insurance coverage.

As noted above, he concluded that the City knew that Mi-Sask had “insurance to cover the claim against it” and, as a result, questioned why it had failed to adduce evidence as to the extent of that insurance coverage (at para 18). He found that this left a critical question unanswered. It is for that reason he found that the City had not discharged the onus of proving “that its judgment enforcement measures will be thwarted” (at para 20). [ 64 ] The City says this reasoning reflects two errors.

First, the City argues that the Chambers judge dismissed the application on the basis of the insurance issue alone, while failing to examine the balance of the evidence. The City says that, by proceeding in that fashion, the Chambers judge disregarded a material fact, thereby committing an error of law. [ 65 ] The City did not press this first argument at the hearing of this appeal. In any event, the fact the Chambers judge found the lack of evidence as to the terms of the insurance constituted a fatal flaw does not mean he did not take account of the evidence as a whole.

It is clear he was aware of the evidence as to Mi-Sask’s business and financial affairs, including why the directors had chosen to wind up the corporation and what they proposed to do with its remaining assets. He was also aware of the damages claimed by the City from Mi-Sask. In the result, I find this ground is without merit.

[ 66 ] Second, the City argues that the Chambers judge misapprehended the evidence by finding that there was evidence of insurance to cover the claim against Mi-Sask. It notes that Bernie Miazga’s evidence was offered only in relation to the question of whether Mi-Sask had coverage for the costs of defending the underlying action and argues that related solely to coverage for that purpose, and not to insurance which would indemnify Mi-Sask for amounts found to be payable pursuant to a judgment.

On that basis, it submits that the evidence of insurance was irrelevant to the question of whether enforcement of a judgment would likely be wholly or partially ineffective. [ 67 ] Mi-Sask submits that this Court cannot properly consider the City’s assertion that the Chambers judge misapprehended the evidence. With respect, I do not agree. The second ground of appeal for which leave was granted is broadly stated. Justice Schwann characterized the second ground of appeal as closely related to the first.

However, she also referred to the fact that the insurance issue was raised by Mi-Sask in the context of the defence costs exception specified in s. 5(5)(b)(iii) of the EMJA . As I understand it, the City argues that the Chambers judge misapprehended the evidence of insurance and, as a result of that error, erred further by finding that the City’s failure to provide additional evidence meant it had failed to establish a prima facie case.

That argument falls within the second ground of appeal. [ 68 ] Turning to that second ground of appeal, the City’s argument is that there was no evidence of insurance other than for legal fees. For the following reasons, I am of a different view. [ 69 ] The evidence of insurance considered by the Chambers judge is a single brief paragraph in Bernie Miazga’s affidavit. Mr. Miazga there deposed that Mi-Sask has insurance coverage “[i]n these proceedings”. The language is not limited to insurance for legal costs.

However, the remainder of the paragraph relates solely to insurance coverage for professional fees and disbursements incurred to respond to the underlying action. Further, this evidence was adduced to demonstrate that Mi-Sask would have expenditures that fell within the exception specified in s. 5(5) (b)(iii). As such, this evidence of insurance could be interpreted in the manner suggested by the City; that is, as evidence of insurance for legal costs, but for no other risks. [ 70 ] However, the

interpretation of this evidence is a question of fact and, as such, is reviewable on the palpable and overriding error standard. It was open to the Chambers judge to find that the statement that “[i]n these proceedings, Mi-Sask has insurance coverage” did not relate only to insurance for legal fees. As such, it was open to him to find – and thus was not a palpable and overriding error – that there was insurance that would be available to indemnify Mi-Sask in relation to at least some part of any judgment. It is clear that is all he found.

That is why he referred to the City’s failure to adduce evidence as to the extent and limits of and deductible for the insurance. [ 71 ] The fact that the Chambers judge did not err in the manner alleged by the City does not resolve this ground of appeal. The Chambers judge found that, but for the evidence of insurance, it was “obvious” that Mi-Sask would be unable to satisfy a judgment. Further, it was common ground that Mi-Sask intended to pay expenses relating to winding up, wages and other operating expenses.

As I will explain below, I agree with the Chambers judge that at least some of those payments – including those for winding up the corporation – would have been for purposes other than the exceptions specified in s. 5(5)(b). For that reason, and leaving aside any potential insurance coverage, it follows the Chambers judge found that a prima facie case had been made out. [ 72 ] The question, accordingly, is whether the Chambers judge erred by finding evidence that there was some insurance meant that the City had to lead evidence as to the terms of that insurance to make out a prima facie case.

As I have indicated, the requirement to demonstrate a prima facie case to meet the evidentiary burden means the evidence must be sufficient to permit a factual determination. At best, the finding of fact that there was insurance that would provide coverage for some portion of the claim meant that it was still possible enforcement of a judgment would be wholly or partially ineffective. [ 73 ] It is important to recall that the City was not required to make out a prima facie case that enforcement would be ineffective in whole or in part.

It was only required to make out a prima facie case that enforcement was likely to be ineffective in whole or in part as a result of actions on the part of Mi-Sask specified in s. 5(5) (b), other than a disposition for one or more of the three specified exceptions. It was open to the Chambers judge to reach that conclusion despite the fact that he found there was some insurance coverage relating to this $8,000,000 claim.

This is particularly so because Mi-Sask did not lead evidence that there was sufficient insurance to pay any shortfall, including any amount not falling within the three exceptions. [ 74 ] Further, here, as in relation to proof on a balance of probabilities, it is important that the evidence as to the particulars of the insurance lay entirely with Mi-Sask. It, not the City, was the party that knew whether the insurer had confirmed coverage in relation to all aspects of the City’s project claim.

Mi-Sask, not the City, knew the type of coverage, the policy limits, the deductible, and other terms that might affect the amount available. Mi-Sask provided none of this information and now argues that the uncertainty created by its minimal disclosure is a sufficient answer to the City’s prima facie case.

In these circumstances, a less stringent approach should have been taken when determining whether the evidence was sufficient to demonstrate a prima facie case, just as it would if Mi-Sask had adduced evidence that it had an unspecified amount on deposit with an unidentified bank. [ 75 ] For these reasons, it is my view that the Chambers judge erred in concluding that the City had not made out a prima facie case and, as a result, he erroneously concluded that the City was obliged to adduce further evidence as to Mi-Sask’s insurance.

In doing so, the Chambers judge committed a palpable and overriding error in assessing the facts. The error was attributable, at least in part, to his legal errors in relation to the evidentiary and persuasive burden. Given the evidence led by the City, Mi-Sask had a tactical burden to disclose the relevant evidence and not simply to raise a question about it. The City was not obliged to adduce that evidence by cross-examining Bernie Miazga and entering into the potentially complex and time-consuming task of demonstrating it is likely there would be insufficient insurance coverage to cover a claim.

Imposing such an obligation would fundamentally undercut the balance necessary to make the preservation order remedy effective to protect the legitimate interests of plaintiffs while still protecting defendants’ property rights. C. Did the Chambers judge err by failing to grant a preservation order as a result of committing the specified errors? [ 76 ] Given that the Chambers judge concluded that the City had not made out a prima facie case, he would also necessarily have concluded that it did not prove its case on a balance of probabilities and, as such, did not discharge the persuasive burden.

In my respectful opinion, that finding would have been incorrect for the same reasons as the Chambers judge’s conclusion that the evidential burden had

not been discharged. The City did satisfy the persuasive burden. [77] My conclusion that the Chambers judge should have found that the City met the persuasive burden does not result merely fromthe fact that Mi-Sask is likely to be unable to satisfy a judgment in whole or in part. The court has the authority to grant a preservationorder only if there is likely to be a shortfall as a result of the disposition of, damage to, dissipation of, destruction of, concealment of or anydealing with property, other than for a reason specified in s. 5(5)(b)(i), (ii) or (iii).

The question, accordingly, is whether Mi-Sask is likelyto expend any of the funds remaining from the auction proceeds and the building proceeds for reasons other than those three exceptions.Mi-Sask proposes to use the amount remaining from the auction proceeds and the building proceeds to pay taxes and other governmentfees and charges; ongoing business expenses such as utilities, insurance, payroll, bank and financial charges; and professional fees,disbursements and other costs relating to its winding up. [78] In his obiter comments, the Chambers judge dealt with certain aspects of this question.

In particular, he considered whether, if apreservation order was granted, the payment of shareholder loans would fall within the exception specified in s. 5(5)(b)(ii); that is, wouldthose payments constitute a disposition for the purpose of “carrying on the business of the defendant in the ordinary course”? [79] The Chambers judge first considered the meaning of “carrying on business”, relying on Kepis & Pobe Financial Group Inc. vTimis Corporation, 2018 BCCA 420, 429 DLR (4th) 237 [Kepis], for the proposition that the question of whether the payment ofshareholder loans is a payment in the ordinary course of business is a question of fact.

He noted that Mi-Sask began selling its assets onlyafter the project claim had been commenced and that the sale of Mi-Sask’s assets resulted in the immediate cessation of its business. In hisview, this situation was distinguishable from that considered in Hans v Volvo Trucks North America Inc., 2014 BCSC 1123 [VolvoTrucks], a Mareva injunction decision cited by Mi-Sask. In Volvo Trucks, the Court held that assets could be used to satisfy loanobligations incurred in the normal course of operations.

The Chambers judge then commented as follows: [34] Furthermore, on the plain wording of ss. 5(5)(b)(ii), Mi-Sask simply is not carrying on business. To broaden the ordinary meaningof “carrying on a business” to include “winding up a business” requires a stretching of the ordinary and grammatical meaning of the initialphrase. [80] The Chambers judge then considered the meaning of “ordinary course of business”. He referred with approval to the reasoningin 1482221 Alberta Ltd. v Haney Farms

(1985) Ltd., 2009 ABQB 760, 486 AR 12 [Haney Farms]. Haney Farms related to s. 17(2)(b)(i)of the Civil Enforcement Act, RSA 2000, c C-15, which provided that a defendant’s dealing with property “otherwise than for the purposeof meeting the defendant’s reasonable and ordinary business or living expenses” could be subject to an attachment order. Attachmentorders under that legislation have the same purpose as preservation orders. Haney Farms, the target of the application for an attachmentorder, had sold or was in the process of selling many of its assets and had shut down its feedlot business and gravel pit.

It intended tocontinue farming on leased land and operating a seed conditioning business. Master Hanebury held that selling off assets to pay down debtin times of economic difficulty “cannot be described as the meeting of ordinary expenses”, as “[t]he ordinary business transactions offarming companies do not include the disposal of almost all of their lands and animals and much of their equipment” (at para 51).

As hesaid: [52] This disposal of land and assets and the change in the nature and focus of Haney Farms’ business are sufficient to establishreasonable grounds for believing that Haney Farms is dealing with its assets for a purpose other than that of meeting its ordinary businessexpenses. (Emphasis in original) [81] In the view of the Chambers judge, the Alberta legislation “bears great similarity to ss. 5(5)(b)(ii) of the EMJA and is more inline with Saskatchewan’s legislation respecting the complete sale of a defendant’s assets and proposed distribution to unpaid creditorsthan Volvo Trucks” (at para 37). [82] Although the Chambers judge did not reach firm conclusions in relation to these issues, I agree with the thrust of his reasoning.In Robitaille v American Biltrite (Canada) Ltd., (SCC), [1985] 1 SCR 290 at 291 [Robitaille], the Supreme Courtconsidered the meaning of “ordinary course of business” in the context of s. 73 of the Bankruptcy Act, RSC 1970, c B-3, commenting asfollows: It is not wise to attempt to give a comprehensive definition of the term “ordinary course of business” for all transactions.

Rather, it is bestto consider the circumstances of each case and to take into account the type of business carried on between the debtor and creditor. [83] In Jensen v Harrison & Vancouver Securities Ltd., (BC CA), [1933] 3 DLR 319 (BCCA) at 322, the BritishColumbia Court of Appeal adopted the same approach – that is, that this is a question of fact that depends on the particular circumstancesof each case – in the context of a decision as to whether a sale has been made in the ordinary course of business within the meaning of theSale of Goods Act, c 225, RSBC 1924, s 60(1).

So too did Baynton J. in Royal Trust Co. v H.A. Roberts Group Ltd., (SK KB), [1995] 4 WWR 305 (Sask QB), in relation to the meaning of “ordinary course of business” in a trust deed. See also Brownell vUnited Dominions Corp. (Canada), 1984 CarswellOnt 619 (WL) (SC (H Ct J)) at para 7; Camco Inc. v Frances Olson Realty

(1979) Ltd., (SK CA), [1986] 6 WWR 258 (Sask CA) at 276; and Royal Bank of Canada v 216200 Alberta Ltd. (1986), (SK CA), 33 DLR (4th) 80 (Sask CA) at 87, all of which relate to personal property security legislation. [84] Each of these decisions is consistent with the approach specified in Robitaille, taking account of the factors that bear on theinterpretation of the relevant legislation. Mi-Sask submits that a winding up is part of the ordinary lifecycle of a corporation and isaccordingly in the ordinary course of business. With respect, that

interpretation is not consistent with the grammatical and ordinary senseof the “carrying on the business…in the ordinary course”. Nor is it consistent with the intention of the Legislature in providing forpreservation orders; that is, to provide an effective remedy to prevent judgment enforcement being wholly or partially ineffective as aresult of the disposition of, damage to, dissipation of, destruction of, concealment of or any dealing with property by a defendant, otherthan for the three exceptions. [85] I need not decide whether selling assets to pay down debts in difficult times can never constitute carrying on business in the

ordinary course, as Master Hanebury appears to suggest might be the case in Alberta. However, the intention of the Legislature would be frustrated by an

interpretation that permitted a corporation to dispose of all of its assets and to pay off all manner of debts, including professional fees and other expenses incurred after it ceased to carry on business, thereby frustrating judgment enforcement. Mi-Sask was in the business of sewer and water construction. It is no longer carrying on that business in the ordinary course or otherwise, leaving aside the potential argument that costs incurred to defend the project claim might fit that description.

That argument was not advanced by Mi- Sask and thus need not be addressed. [ 86 ] For these reasons, the proposed disposition of funds to pay for professional services or other costs relating to the winding up, and for wages or other ongoing operating costs (as Mi-Sask is no longer carrying on business) would not fall within the s. 5(5)(b)(ii) exception. Those expenditures would increase the shortfall that would be suffered by the City. That being so, all of the conditions necessary for the grant of a preservation order were proven on a balance of probabilities and a preservation order could have issued.

Cast in the terms of the third ground of appeal, the Chambers judge erred by failing to grant a preservation order as a result of committing the errors specified in the analysis of the first and second grounds of appeal. [ 87 ] For the sake of clarity, I would emphasize that Mi-Sask did not propose to use the remaining proceeds to pay professional fees and disbursements incurred to defend the project claim.

In his June 2, 2020, affidavit, Bernie Miazga deposed only that Mi-Sask’s insurance coverage “will not cover every professional fee and disbursement associated with these proceedings ” (at para 17, emphasis added). In her August 4, 2020, affidavit filed in response to the application for an order that Mi-Sask be restrained from disbursing further funds pending the determination of its appeal, Ms. Kitella deposed that Mi-Sask did not expect to incur professional fees and disbursements other than in relation to its winding up of Mi-Sask and this appeal.

She also averred that the insurer would not cover professional fees and disbursements related to the preservation order application and this appeal but did not advert to other fees or disbursements. In light of these carefully drafted affidavits, payments for fees and disbursements to defend these proceedings are not at issue, and I need not decide how they would fit within the legislative scheme relating to the three exceptions. VI.

SHOULD THE APPLICATION BE REMITTED TO THE CHAMBERS JUDGE? [ 88 ] Mi-Sask submitted that if this Court decided that the Chambers judge had erred, the matter should be remitted to the Chambers judge. It argued that this would be the correct result, as the Chambers judge had not decided whether Mi-Sask should be entitled to an exemption to pay legal expenses, or as to the amount of security the City should be required to post. It says that in these circumstances, the Court does not have the necessary evidence to exercise its jurisdiction pursuant to s. 12(1) (

d) of The Court of Appeal Act, 2000 , SS 2000, c C-42.1 , to make an order that could have been made by the Chambers judge. It relies on the test specified in Hrycyna v Hood , 2019 SKCA 30 at paras 83–84 , [2019] 6 WWR 712. As this Court there noted, an appeal court can make any order the court below should have made, provided the record permits it to do so. [ 89 ] I have addressed the issue of costs incurred to defend the underlying action above. The evidence before this Court is that Mi- Sask did not propose to pay those costs from the remaining proceeds.

There is accordingly no need to further consider that issue. [ 90 ] As to the fees and disbursements incurred to defend against the application for a preservation order and for this appeal, the City did not take the position that those costs could not fall within the three exceptions and should not be permitted for that reason. Rather, the City took the position that Mi-Sask has failed to adduce sufficient evidence as to the legal fees it might incur that are not covered by its insurance.

It described this as a failure to discharge a burden that falls on a defendant to lead evidence that a proposed disposition of assets will be within the scope of an exception specified in s. 5(5)(b). [ 91 ] Based on the evidence before this Court – some of which was not available to the Chambers judge but can be properly considered in relation to the remedy – I substantially agree with the City on this point.

I have described the very limited evidence adduced by Mi-Sask in the Chambers application in relation to the uninsured fees and disbursements it may incur to defend against the application for a preservation order and for this appeal. Further, in her August 4, 2020, affidavit, Ms. Kitella provided particulars of expenditures by Mi-Sask from June 11 through July 30, 2020, which included the payment of legal fees of $39,394.26 to MLT Aikins LLP, and payment of an additional $50,000 in trust to that firm.

There are no particulars as to whether those payments related to winding up, the application for a preservation order, or this appeal. [ 92 ] In 2055190 Ontario Ltd. v Zhao , 2018 SKCA 66 at paras 84–96 , [2019] 12 WWR 401 [ Zhao ], this Court confirmed that an applicant for a preservation order is not obliged to prove the extent of the shortfall it may suffer in a manner similar to proving liquidated damages. In my view, it is equally true that a defendant that claims a proposed expenditure falls within a s. 5(5)(

b) exception is not required to prove the amount of that expenditure to that standard. Nonetheless, the judge must be satisfied that expenditures that fall within an exception would likely be incurred. [ 93 ] Here, again, Mi-Sask has failed to meet that standard. Mi-Sask seeks to rely on what might at best be characterized as uncertainty created by its own limited disclosure as to additional expenditures that may be required to pay costs incurred to defend the application for a preservation order and for this appeal, in order to have this matter returned to Chambers. Raising a question is not enough.

This application turns entirely on affidavit evidence and all the evidence necessary to make the decision is before the Court. I am not satisfied, based on that evidence as a whole, that Mi-Sask will need additional funds to pay costs incurred for these purposes. [ 94 ] Mi-Sask also submits that a preservation order should not issue as the City has failed to make submissions relating to security.

In the alternative, it says the City should be obliged to deposit $200,000 in security, based on the fact that courts ordered security in the amount of 20% of the amount subject to the preservation order in Custom Foundations and in Taylor v Heritage Roofing & Exteriors Inc. , 2014 SKQB 85 , 440 Sask R 261. [ 95 ] As Mi-Sask notes, s. 5(7) of the EMJA requires that security be posted:

(7) A preservation order shall require the plaintiff to provide security in an amount that, in the opinion of the court, is sufficient to

compensate the defendant or other person affected by the preservation order for pecuniary loss that may be caused as a result of the preservation order unless, in the court’s opinion, requiring the plaintiff to provide security would cause undue hardship to the plaintiff.

In Zhao , this Court confirmed that security must be provided and that an undertaking does not meet that requirement. [ 96 ] In Ş ekerbank T.A. Ş. v Arslan , 2017 SKQB 205 , the Court described the obligation on an applicant for a preservation order to address the issue of security as follows: [55] First, I agree with the conclusion of Danyliuk J. in Custom Foundations Ltd. v Welcome Homes Ltd. , 2017 SKQB 148 , at paras 41- 43 [ Custom ] that ss. 5(7) requires that the plaintiff provide security.

Section 5(7) describes the measure to be applied: that is, the security should be in an amount “sufficient to compensate the defendant or other person affected by the preservation order for pecuniary loss that may be caused as a result of the preservation order”. [56] Further, the plaintiff should, to the extent possible, deal with this issue in its application: see Custom at paras 39-40, and Alliance Pulse Processors Inc. v Hudson Bay Port Company , 2016 SKQB 307 , at para 14 . That said, I agree with Danyliuk J. that a plaintiff may have little or no ability to quantify a defendant’s potential losses.

It should not be denied relief for that reason. In practical terms, the defendant may be obliged to provide evidence if it wishes to ensure there is adequate security. [ 97 ] In Custom Foundations , Danyliuk J. said this: [47] Thus, it strikes me that an applicant under s. 5 of the EMJA must propose something concrete in the way of posting security. If an applicant has no knowledge of damages, it may be forced to state just that in its evidence and perhaps even propose a somewhat arbitrary sum.

It does not necessarily have to be for the full amount of the claim, but the plaintiff must deal with this portion of such an application. … (Emphasis in original) [ 98 ] In my view, the approach reflected in these cases is correct. An applicant for a preservation order should, to the extent possible, deal with this issue in its application, but should not be denied relief because it has little or no ability to quantify the respondent’s potential losses. [ 99 ] The City did not address the issue of security in its factum in these proceedings. It should have done so. However, that is not fatal in this case.

It did propose at the hearing of the appeal that security in the amount of $50,000 would be appropriate. Mi-Sask affirmed its position that the appropriate amount of security is $200,000, but when pressed to explain why, argued only that the $952,360.89 in remaining proceeds might be invested. There was no evidence and no reasonable basis to conclude that Mi-Sask might suffer a loss of that magnitude if it was denied the opportunity to invest these funds. Further, it bears emphasizing that Mi-Sask’s business is being wound up as part of a retirement plan.

In those circumstances, what loss beyond a minimal investment loss could reasonably be inferred? In these circumstances, an order that security in the amount of $50,000 can be characterized as generous to Mi-Sask. VII. CONCLUSION [ 100 ] For these reasons, I would allow the appeal, set aside the QB Decision , and grant a preservation order on the following terms: (

a) Mi-Sask is prohibited from disposing of any of its property in any fashion, including, for greater certainty, any of the proceeds remaining from the disposition of its assets. (

b) This preservation order will terminate on the expiry of 30 days after issuance of a judgment in the underlying action. (

c) The City shall provide security pursuant to s. 5(7) of the EMJA in the amount of $50,000 in cash, or in a form agreed by the parties, and failing such agreement, in a form determined by the Court of Queen’s Bench on further application by either party, within 30 days of the date of this order. [ 101 ] The appellant shall have its costs of this appeal and in the court below, calculated in the usual way. “Barrington-Foote J.A.” Barrington-Foote J.A. I concur. “Caldwell J.A.” Caldwell J.A. I concur. “Schwann J.A.” Schwann J.A.