Swift River Farms Ltd. Appellant (Defendant) v. Pillar Capital Corp., 2022 SKCA 89

Court of Appeal for Saskatchewan Docket: CACV3818 Citation: Swift River Farms Ltd. v Pillar Capital Corp. , 2022 SKCA 89 Date: 2022-08-04 Between: Swift River Farms Ltd. Appellant (Defendant) And Pillar Capital Corp. Respondent (Applicant) And June Bond, Bonster Farms Inc., Roger Bond and Daniel Lingnau Non-Parties (Defendants) Before: Richards C.J.S., Caldwell and Barrington-Foote JJ.A. Disposition: Appeal allowed in part Written reasons by: The Honourable Mr. Justice Barrington-Foote In concurrence: The Honourable Chief Justice Richards The Honourable Mr.

Justice Caldwell On appeal from: 2021 SKQB 119 , Saskatoon Appeal heard: September 16, 2021 Counsel: Ryan Pederson for the Appellant Nicholas Conlon and Mike Russell for the Respondent Barrington-Foote J.A. I. INTRODUCTION [ 1 ] On September 2, 2020, Pillar Capital Corp. [Pillar] filed a statement of claim commencing a foreclosure action against Swift River Farms Ltd. [Swift River]. The action resulted from Swift River’s default under a mortgage of approximately 14 quarter sections of farmland it owned in the rural municipality of Montrose [Montrose Lands] and approximately 1 quarter

section of farmland it owned in the rural municipality of Loreburn [Loreburn Lands] [collectively Lands]. The mortgage secured a loan from Pillar to Swift River [Mortgage]. [ 2 ] On October 27, 2020, a judge of the Court of Queen’s Bench granted an order nisi for judicial sale by real estate listing [Order Nisi]. Swift River failed to redeem the Lands within the 120-day redemption period specified in the Order Nisi. As a result, the selling officer named in the Order Nisi listed the property for sale with a real estate agent.

The listing quickly attracted several offers, one of which was accepted by the selling officer, subject to approval by the Court. [ 3 ] On April 21, 2021, a judge of the Court of Queen’s Bench [Chambers judge] issued a judgment which dealt with three applications: Pillar Capital Corp. v Swift River Farms Ltd. , 2021 SKQB 119 [ Judgment ]. The Chambers judge denied an application by Swift River to set aside the Order Nisi. He granted Pillar’s application for an order confirming the sale for the sum of $5,800,000 [Final Order].

He also denied an application to seal an affidavit of the selling officer which outlined the offers received and counteroffers made by the selling officer [Affidavit], despite having refused Swift River’s request to see that affidavit before the order for sale was made. [ 4 ] Swift River has appealed the refusal to set aside the Order Nisi, arguing that there are exceptional circumstances which justify that remedy. I would dismiss that aspect of the appeal. Swift River has also appealed the Final Order. I would allow that aspect of the appeal. My reasons for those conclusions follow. II.

BACKGROUND [ 5 ] As a mortgage of farmland, the Mortgage was subject to The Saskatchewan Farm Security Act , SS 1988-89, c S-17.1 [ Act ]. Accordingly, Pillar could not commence an action to foreclose Swift River’s equity of redemption or for sale of the Lands without first taking the steps specified in the Act . Pursuant to s. 12 of the Act , it was required to provide notice of intention to Swift River, to attend mediation and, if mediation did not succeed, to apply for an order granting leave to commence an action.

[ 6 ] The loan having fallen into default, Pillar served Swift River with a notice of intention on October 4, 2019.

On November 25, 2019, Swift River and Pillar entered into a forbearance agreement in which Pillar agreed to delay enforcement proceedings until February 29, 2020, on the following conditions: 2.02 The Debtors hereby acknowledge and agree that if the Indebtedness has not been repaid to Pillar by the Expiry Date, Pillar has the right to continue with its efforts to enforce the Mortgage and that notwithstanding any ongoing efforts being made by the Borrower to sell the Mortgaged Land, if Pillar’s mortgage enforcement proceedings progress to the point where Pillar is issuing a Statement of Claim and applying for an Order Nisi, the Debtors will not oppose those proceedings. [ 7 ] Swift River did not repay the indebtedness prior to the February 29, 2020, “Expiry Date” specified in the forbearance agreement.

As a result, Pillar applied for leave to commence an action for judicial sale. On August 18, 2020, Danyliuk J. granted leave, ordering that s. 9(1) (

d) of the Act does not apply to the Mortgage. As noted above, Pillar then issued the statement of claim. In response, Swift River sent Pillar what it described as an “Email Brief”, which stated that Swift River would not submit a statement of defence in response to Pillar’s statement of claim. It also said this: 2.

Pillar will have the right to move forward the Redemption motion before Queens Bench [ sic ], which [Swift River] is requesting that the Redemption court filings to [ sic ] be sent to Adam Rock of Nerland Lindsey LLP of Calgary Alberta due to communication issues produced by Corvid 19 [ sic ]. … [ 8 ] Further, the Email Brief said that Swift River contemplated the continuation of negotiations with a prospective purchaser with a view to enabling Swift River to service and pay out the Mortgage.

That was consistent with the evidence of Mark Langefeld, a Swift River director, who explained its response to the statement of claim in his affidavit as follows: 5. … Swift River did not file a Statement of Defence in these proceedings in part because the directors of Swift River were confident that Swift River would be able to pay out its indebtedness to the Plaintiff before the Plaintiff could obtain title to the lands encumbered by the Mortgage by way of foreclosure or have any of the said lands sold by way of judicial sale, and in part because Swift River did not know or understand its rights under the [ Act ]. … [ 9 ] Mr.

Langefeld’s reference to Swift River’s “rights” was to s. 105(2) of the Act , which precludes a waiver of the rights of a mortgagor of farmland: 105(2) Except as otherwise provided in this Act , every agreement or bargain, verbal or written, express or implied, entered into after May 24, 1988, that: (

a) either: (

i) this Act ; or (ii) any provision of this Act ; shall not apply or that any benefit or remedy provided by this Act shall not be available; or (

b) in any way limits, modifies or abrogates or in effect limits, modifies or abrogates any benefit or remedy described in clause (a); is null and void and of no effect. [ 10 ] Mr. Langefeld also deposed that from at least July 6, 2020, to March 15, 2021, he understood that if Swift River failed to pay out the Mortgage, the Lands would be listed for sale at a listing price that would reflect the valuation of the Lands specified by a January 17, 2019, appraisal report and the valuation of the improvements on the Lands specified in an October 25, 2017, appraisal report.

Those appraisals, which were obtained by Swift River and provided to Pillar, valued the Lands at $7,532,000 and the improvements at $724,728. [ 11 ] Swift River attended the hearing of the application for an order nisi on October 27, 2020, and successfully argued that the redemption period should be 120 days rather than the 90 days proposed by Pillar. It convinced the Court that the upset price should be $5,500,000, which was higher than that proposed by Pillar.

The Order Nisi did not specify a listing price. [ 12 ] As noted above, Swift River failed to pay the $5,303,303 required to redeem the Lands, which were accordingly listed for sale by the selling officer with Ted Cawkwell of RE/MAX Saskatoon.

The listing price was $5,635,000 for the Montrose Lands and $615,000 for the Loreburn Lands, effective March 10, 2021, and March 12, 2021, respectively. [ 13 ] On March 19, 2021, Swift River – having finally retained counsel – applied to open up the noting for default that had occurred as a result of its failure to file a statement of defence, and for leave to file a statement of defence and for an order setting aside the Order Nisi. The application identified several matters which it described as defences.

They included an allegation that Pillar had failed to plead facts that would ground a claim for the remedies sought and that it had claimed several amounts to which it was not entitled, including extension fees of $181,887 and a forbearance fee of $45,874.77. [ 14 ] On March 26, 2021, Pillar responded by filing its application for an order confirming sale. The selling officer filed affidavits in opposition to Swift River’s application to set aside the noting in default and Order Nisi, and in support of Pillar’s application for an order confirming sale.

In his March 23, 2021, affidavit, he deposed that he had received four offers from four distinct parties for the Montrose Lands by March 15, 2021, and back-up offers from two of those parties by March 18, 2021. On March 15, 2021, the selling officer countered the offer made by Sparrow Ag Ltd. [Sparrow], which he considered to be the most favourable. The March 23 affidavit did not disclose the amount of any of these offers. [ 15 ] Sparrow conditionally accepted the counteroffer and removed the conditions on March 23, 2021.

A copy of the Sparrow sale agreement, which the selling officer described as a binding, unconditional contract to sell the Montrose Lands, subject to Court approval, was appended to the March 23 affidavit. However, the sale price and deposit amount had been redacted as “commercially sensitive

information”. The selling officer also deposed that it was critical that the Lands be sold as soon as reasonably possible, as prospective purchasers would lose interest as the time for spring seeding approached. [ 16 ] The selling officer also swore the Affidavit on March 26, 2021. The Affidavit appended a market valuation of the Lands – but not the improvements – by David Molberg of Hammond Realty [Molberg valuation]. Mr. Molberg valued the Lands at $5,950,000 as at July 20, 2020. That was the only opinion as to the value of the Lands that was filed by Pillar in support of the application for the Order Nisi.

The Affidavit contained the following explanation by the selling officer of the significance of the Molberg valuation: 7. The period within which the Order Nisi could be appealed has long since passed, and I consider myself to be governed by the Order Nisi in all respects. In particular, I interpret the Order Nisi as implicitly determining that either the Molberg Valuation, or the Molberg Valuation plus a very small premium, represents the Court’s best estimate as to the value of the lands.

Based upon my experience in practicing insolvency and foreclosure law in Saskatchewan, upset prices are very often set between 75-90% of the Court’s best estimate of the value of the lands in question. In this case, the Court determined that upset prices between 80.0% and 92.4% were appropriate, depending upon which parcels of land were being sold and the timing within the listing. 8.

As such, in determining a listing price and in considering offers to purchase, the Molberg Valuation must, and does, represent the starting point of my analysis. [ 17 ] The Affidavit also disclosed that the first three offers received by the selling officer were: $5,635,000 from Daniel Lingnau, Shauna Lingnau and Gage Lingnau; $5,700,000 from Sparrow; and $5,700,000 from Kinzie Farms Ltd. It stated that the second Sparrow offer was $5,800,000.

The counteroffer from the selling officer that was accepted by Sparrow was also for $5,800,000 but clarified that the sale was “as-is/where is” and would include only personal property that was affixed to the Lands. [ 18 ] There was another important development shortly before Pillar applied for the order confirming sale. The Montrose Lands had been leased by Swift River to Daniel Lingnau for several years. On March 11, 2021, Mr.

Lingnau agreed to lease the Montrose Lands from Swift River for an additional term, effective March 1, 2021, and ending on the earlier of December 31, 2021, or when the 2021 crop was completely harvested. Mr. Langefeld deposed that Swift River did not know the selling officer had entered into an agreement to sell the Montrose Lands until March 23, 2021. Mr. Lingnau appeared at the hearing of the application for an order confirming sale and was added as a party by consent, taking the position that any title that may issue should be subject to his leases. III.

JUDGMENT UNDER APPEAL [ 19 ] The Judgment dealt first with the application by Swift River pursuant to Rule 10-13 of The Queen’s Bench Rules for orders opening up the noting in default, granting leave to file a statement of defence and setting aside the Order Nisi. The Chambers judge concluded that the application to set aside the Order Nisi was an impermissible collateral attack on a judgment of the Court that could only be reversed on appeal.

He held that Swift River could not rely on Rule 10-13 in these circumstances, as that Rule applies only to the administrative procedure of noting for default of defence within the registrar’s office and then taking out default judgment for the amount claimed. [ 20 ] Despite these findings, the Chambers judge agreed that the court has the inherent jurisdiction to set aside a judgment in exceptional circumstances, citing Shell Canada Products Ltd. v L & D Truck Ltd. , 2005 SKQB 336 , 276 Sask R 315 [ Shell Canada ], in support of that proposition.

However, he found that there were no exceptional circumstances present in this case. Among other things, he found that the forbearance agreement was not unfair or an exceptional circumstance as alleged by Swift River, as it had received the quid pro quo of additional time in return for its agreement not to file a statement of defence.

He noted that Swift River was, despite the forbearance agreement, still able to raise concerns as to the amount due under the mortgage and as to what it now claimed to be improper charges. [ 21 ] The Chambers judge also emphasized Swift River’s failure to make the application during the redemption period – and thus before the judicial sale – and to instead enter into the Lingnau leases.

Indeed, he found that entering into those leases breached a provision in the Pillar loan agreement not to “dispose of or transfer by way of sale, conveyance, assignment, mortgage, charge, security interest or otherwise … without the prior written consent of [Pillar]”, other than in the ordinary course of business. He also commented that it might be “illegal” and constitute contempt of the Order Nisi for judicial sale ( Judgment at para 21(g)). He noted that the order for judicial sale had been acted upon by a number of parties, some of whom might suffer prejudice if the sale process was stopped.

For that reason, he found not only that fairness and equity called for the sale process to proceed, but that no fairness or equity considerations favoured Swift River. [ 22 ] In the result, the Chambers judge rejected Swift River’s application.

However, in doing so, he did not address its argument that the forbearance agreement was void pursuant to s. 105(2) of the Act ; that Swift River erroneously believed it could not defend against the application for an order nisi; and that this constituted an exceptional circumstance. [ 23 ] Having rejected Swift River’s application, the Chambers judge turned next to Pillar’s application for an order confirming the sale.

He found that there had been compliance with the Order Nisi, that the proper procedures had been followed, and that there was fair exposure to potential buyers in circumstances where there was strong demand. He was satisfied a fair price was obtained. As he put it: [ 24 ] Sparrow Ag Ltd.’s offer was accepted and thus subject to confirmation by this Court, there is a binding contract in place. Unless there is good reason to not approve contracts that have been entered into pursuant to a judicial sale process, courts should confirm the sales conducted in compliance with an order nisi .

It would undermine the entire judicial sale process and the vital purpose that process serves, if sales conducted in accordance with an order nisi were not confirmed. [24] On that basis, he ordered that the sale to Sparrow be confirmed. [ 25 ] The Chambers judge turned next to the question of whether, given that the sale was approved, he had the jurisdiction to decide if the purchaser’s title would be subject to the Lingnau leases. His reasoning on that point began as follows:

[27] I have decided … that it is in the interests of all parties that I decide the issue notwithstanding a somewhat tenuous jurisdictionaland evidentiary basis. I am able to do this by making assumptions that obviate issues that may arise from Mr. Lingnau not having filed anapplication nor evidence in support of his position. For the purposes of this decision, notwithstanding that I have reservations whetherwhat follows is in fact the case, I am making the assumptions that: a. Mr.

Lingnau entered into the leases in good faith, without knowledge of the foreclosure proceedings that were underway; b. there was no collusion or conspiracy between him and Swift River Farms; c. Swift River Farms was not acting improperly in entering into the leases; and d. Mr.

Lingnau is in actual occupation of the lands in question. [28] Should my decision not be accepted and be appealed on jurisdictional or other grounds, it is to be understood that I have made nofindings of fact with respect to the matters so assumed and as to the facts surrounding and the legal status of the leases entered intobetween Swift River Farms and Mr. Lingnau. (Emphasis in original) [26] Based on this tentative and hypothetical foundation, the Chambers judge addressed the question of whether the effect of ss.13(1)(a), 14 and 18(1)(

d) of The Land Titles Act, 2000, SS 2000, c-5.1, is that a lease for a term of less than three years made after amortgage is registered – such as the Lingnau leases – survives a foreclosure pursuant to that mortgage. Those sections provide as follows: Effect of title 13(1) Where the Registrar issues a title pursuant to this Act: (

a) subject to

section 14, the registered owner holds the title free from all interests, exceptions and reservations; ... … Exceptions to clear title 14 Every title is subject to: (

a) any interest that is registered against the title pursuant to this Act or any other Act or law; and (

b) the exceptions, reservations and interests that are implied pursuant to sections 18 to 20, whether or not those exceptions, reservationsand interests are registered against the title or mentioned on any title. … Implied interests 18(1) Subject to subsection (2), every title and the land for which the title has issued, is, by implication and without any special mention inthe title, deemed to be subject to the following exceptions, reservations and interests: … (

d) any subsisting lease or agreement for lease for a term not exceeding three years where there is actual occupation of the land for whichtitle has issued pursuant to the lease or agreement[.] [27] In the view of the Chambers judge, the answer to this question turned on whether there is a conflict in these circumstancesbetween these provisions of The Land Titles Act, 2000 on the one hand, and the provisions of The Queen’s Bench Act, 1998, SS 1998, c Q-1.01, and The Queen’s Bench Rules that deal with orders for sale and the reception of the laws of England in Saskatchewan on the other.In this context, he relied on Saskatchewan Credit Union Ltd. v Goertz and Atlas Industries Ltd. (1989), (SK CA), 73Sask R 81 (CA) [Goertz], the leading case in Saskatchewan as to the source and nature of the authority to order a judicial sale, includingthis

summary statement by Sherstobitoff J.A.: [19] In sum, then, the source of authority to order a judicial sale in mortgage proceedings in Saskatchewan is to be found in theChancery Procedure Amendment Act [1852, 15 & 16 Vict, c 86, s 48], as modified by the Queen’s Bench Act and Rules. As modified, ajudicial sale may be ordered at the request of any party, without the requirement of a deposit, and where necessary or expedient. The pre-existing common law judgments still apply in respect of the general nature of the right to judicial sale. [28] The Chambers judge also found two principles of statutory

interpretation discussed in Ruth Sullivan, Sullivan on theConstruction of Statutes, 6th ed (Markham, Ont: LexisNexis, 2014) at §11.2, §11.3, §11.58 and §11.59 to be of assistance. Thoseprinciples are the presumption of coherence – i.e., the presumption that the body of legislation enacted by a legislature does not containcontradictions or inconsistencies – and the maxim generalia specialibus non derogant – that is, where two provisions are in conflict, thespecific provision prevails over the provision of more general application.

On this basis, the Chambers judge concluded as follows: [37] With the guidance of the Court of Appeal in Goertz and of Sullivan, I am satisfied that there is no conflict between The Land TitlesAct and The Queen’s Bench Act, 1998. The purpose for which The Land Titles Act was passed was to create a land registry system andpriorities within the operation of that system. It does not purport, in any respect, to state or change principles of law relating to foreclosure,judicial sale or the power of this Court to make orders for sale or real property and vesting orders.

The legislation that deals with that isThe Queen’s Bench Act, 1998 and The Chancery Procedure Amendment Act, 1852, 15 and 16 Vict, c 86, s. 48, to the extent that it has notbeen modified by The Queen’s Bench Act, 1998 and The Queen’s Bench Rules.

… [39] There is no question but that The Queen’s Bench Act, 1998 provides this Court the jurisdiction and power to make orders for saleof real property and vesting orders, both generally and in the context of foreclosure proceedings.

The provisions of The Land Titles Act donot limit that jurisdiction and power. [40] It has long been and remains well established within foreclosure law and practice that a final order of foreclosure operates to vesttitle in the mortgagee free and clear of all interests that came into existence following the time the mortgage was registered against title. [41] The Lingnau leases were not in existence when Pillar obtained its mortgage. Under foreclosure law a mortgagee is entitled to haveinterests acquired after its mortgage was obtained and registered, foreclosed off title.

The Land Titles Act does not purport to alterforeclosure law. [29] In the result, the Chambers judge concluded that the title Sparrow would acquire pursuant to the order confirming sale wouldbe clear of the Lingnau leases. [30] Finally, the Chambers judge dealt with Pillar’s application to ban publication of or to seal the Affidavit. Having granted theorder confirming sale, he dismissed the application as moot. He also concluded that even if he had not ordered the sale, he would havedismissed the application based on the open court principle.

He adopted the two-part test for the grant of a discretionary order limitingaccess or publication specified by Iacobucci J. in Sierra Club of Canada v Canada (Minister of Finance), 2002 SCC 41, [2002] 2 SCR522; that is, such an order should only be granted where: [53] … (

a) such an order is necessary in order to prevent a serious risk to an important interest, including a commercial interest, in the context oflitigation because reasonably alternative measures will not prevent the risk; and (

b) the salutary effects of the confidentiality order, including the effects on the right of civil litigants to a fair trial, outweigh its deleteriouseffects, including the effects on the right to free expression, which in this context includes the public interest in open and accessible courtproceedings. [31] In the view of the Chambers judge, there was no important commercial interest of the kind referred to in Sierra Club, being aninterest that “cannot merely be specific to the party requesting the order; the interest must be one which can be expressed in terms of apublic interest in confidentiality” (at para 55).

As the Chambers judge stated, “[h]ad this judicial sale not been approved, I am at a loss tounderstand how public knowledge of what Selling Officer Paul Olfert said in his March 26, 2021 affidavit would place any importantcommercial interest at risk were another judicial sale to occur in the future” (at para 50). IV. ANALYSIS A. Issues [32] At the hearing of this appeal, Swift River submitted that the Chambers judge committed errors that call for this Court’sintervention in relation to three issues.

First, it argued that the Chambers judge erred in law by granting the order confirming sale despitethat the proposed sale price and the particulars of the other offers and counteroffers had not been disclosed to Swift River. [33] Second, it alleged that the Chambers judge erred in law by concluding that title would vest in Sparrow free and clear of theLingnau leases, notwithstanding the provisions of The Land Titles Act, 2000 relating to leases for a term not exceeding three years.

It tookthe position that, if the Chambers judge did so err, there would be no sale, as the order confirming sale provided that Sparrow wouldreceive title clear of the Lingnau leases. [34] Third, Swift River submitted that the Chambers judge erred in the exercise of his discretion by deciding that there were noexceptional circumstances that would justify an order setting aside the Order Nisi.

In particular, Swift River emphasized that it did notknow the forbearance agreement was unenforceable or void and that, as a result, it wrongly believed that it was bound not to defend oroppose the application for an order nisi. It contended that it was prejudiced by this as to the price at which the Montrose Lands were soldand as to “defences” it did not raise as to certain amounts claimed by Pillar. [35] On these grounds, Swift River asks that this Court set aside both the Order Nisi and the order confirming the sale to Sparrow. B.

Did the Chambers judge err by failing to require that the Affidavit beprovided to Swift River before granting the order confirming sale? [36] Swift River’s argument on this point relies on case law that is based on the right to natural justice or procedural fairness.

It citesRodaro v Royal Bank of Canada (2002), (ON CA), 59 OR (3d) 74 (CA), where Doherty J.A. found that“stepping outside of the pleadings and the case as developed by the parties to find liability” was fundamentally unfair to the appellants, asit “denied [the appellants] the right to know the case they had to meet and the right to a fair opportunity to meet that case” (at para 61).The relationship between this basic principle and the pleadings and submissions at trial was affirmed by Brown J. in Saadati v Moorhead,2017 SCC 28, [2017] 1 SCR 543, where the issue of procedural fairness was raised for the first time at the Supreme Court of Canada: [9] Drawing from the Court of Appeal’s statements regarding notice, the respondents argue that the trial judge’s award for mentalinjury was made in breach of procedural fairness, having no basis in the pleadings or submissions at trial.

While I note that therespondents did not argue this point at the Court of Appeal, as the respondents now say and as the Court of Appeal said, cases should not

be decided on grounds not raised (Insurance Corp. of British Columbia v. Patko, 2008 BCCA 65, 290 D.L.R. (4th) 687, at para. 37;Rodaro v. Royal Bank of Canada (2002), (ON CA), 59 O.R. (3d) 74 (C.A.), at para. 60; Burgsteden v. Long, 2014SKCA 115, 378 D.L.R. (4th) 562, at para. 17; R. v. E.M.W., 2011 SCC 31, [2011] 2 S.C.R. 542, at para. 4). This rule is an instance ofnatural justice: each party is entitled to know and respond to the case that it must answer (Canada Trustco Mortgage Co. v.

Renard, 2008BCCA 343, 298 D.L.R. (4th) 216, at paras. 38-39). [37] Swift River also refers to Clarkson Co. v Credit Foncier Franco Canadien (1985), (SK CA), 44 Sask R 151(CA). There, this Court dismissed an appeal by a receiver manager that had applied for a vesting order after arranging for the sale of land.A Chambers judge had refused to grant the vesting order because the debtor and registered owner of the land had not been served and didnot appear at the hearing.

In its per curiam decision, the Court said this about the proper procedure to be followed on such an application: [3] During the presentation of the appeal, a discussion arose as to the proper procedure to be followed by a receiver manager who hasarranged a sale of the real property. The court suggested that first step was to make application to have the sale approved by the court. Thenotice of application should be served upon the registered owner and all other interested parties.

The onus is on the applicant to prove tothe court that all such parties have been served. … [5] Out of such an application, contentious issues could arise which might ultimately have to be settled in an action. [6] If the order for sale is approved, the applicant might then or on a later occasion apply for a vesting order.

However, under nocircumstances should a vesting order be made unless or until the rights of all interested parties have either been relinquished or have beenextinguished by due process. [38] Here, Pillar served the application for an order confirming sale, and no issue arises as to the pleadings. However, Pillar did notserve the Affidavit that had been filed in support of its application and was part of the record before the Chambers judge. Nor did Pillarprovide an unredacted copy of the Sparrow agreement to Swift River.

That being so, Swift River did not know the case to be met, as it didnot have the information required to enable it to fully develop and present its argument as to the adequacy of the price. Pillar concedes thatSwift River raised the issue of price at the Chambers hearing. Indeed, Swift River led the appraisal evidence of the value of the Lands, aswell as evidence of a far higher offer. [39] For these reasons, I respectfully conclude that the fact Swift River did not have the Affidavit constituted a denial of naturaljustice.

The question is whether this Court should refuse to intervene regardless. [40] Pillar contends that there are two reasons why the appeal of the order confirming sale should nonetheless be denied. It submitsthat this Court should not consider this argument, as it was not raised before the Chambers judge. It relies on R v Perka, (SCC), [1984] 2 SCR 232 [Perka], in this context.

Justice Dickson (as he then was) there affirmed that a party “cannot … raise an entirelynew argument which has not been raised below and in relation to which it might have been necessary to adduce evidence at trial” (at 240).As Richards C.J.S. emphasized in Meier v Saskatchewan Institute of Agrologists, 2016 SKCA 116, 405 DLR (4th) 506, this principle isconcerned with fairness: [28] The settled rule, of course, is that this Court is generally loath to entertain a wholly new argument on appeal.

See, for example:The “Tasmania” (Owners) v The “City of Corinth” (Owners) (1890), 15 AC 223 (HL); Lamb v Kincaid (1907), (SCC),38 SCR 516; R v Perka, (SCC), [1984] 2 SCR 232; Howell v Stagg, (SK CA), [1937] 2 WWR 331(Sask CA); Saskatchewan (Workers’ Compensation Board) v Gjerde, 2016 SKCA 30, [2016] 4 WWR 423. [29] That said, this principle is not absolute and it does admit of exceptions.

In this regard, it is important to note that the rule isgrounded largely in the self-evident proposition that it would be unfair to allow an argument to be introduced on appeal in circumstanceswhere the opposing party would have wanted to introduce additional evidence in the court below if it had been aware of the issue. Whenthose concerns are not present, there is necessarily room for more flexibility. [41] In my opinion, the principle described in Perka does not assist Pillar for two reasons. First, I do not agree that this is, insubstance, a new argument on appeal.

The question of access to the Affidavit was very much alive at the Chambers hearing. Pillar hadfiled the Affidavit and applied for a sealing order. Swift River did not take the position before the Chambers judge that a sealing ordershould not be made. However, it contended that any sealing order should not apply to Swift River and that it should have access to theAffidavit. [42] The reason Swift River wanted access to this information is self-evident.

Both the Chambers judge and Pillar would have beenwell aware that Swift River sought to obtain the information as to the price and negotiations in the Affidavit for the purpose of respondingto Pillar’s application for an order confirming sale. That is the fairness issue that arose on the facts, and it was clearly raised in the courtbelow.

The fact that Swift River did not use the phrase “procedural fairness” or “natural justice” is of no moment in the circumstances ofthis case. [43] Second, Pillar suggests that it was prejudiced by Swift River’s failure to identify this as an issue of procedural fairness becausethe Chambers judge and Pillar were deprived of the opportunity to remedy that unfairness – presumably by providing the Affidavit toSwift River. That does not constitute prejudice of the kind referred to in Perka.

Pillar does not suggest that it could have led moreevidence, such as evidence that Swift River had obtained this information by other means. Nor did it identify any other form of prejudicethat would affect its ability to deal with this issue in this Court. [44] Pillar also argues that Swift River could have obtained a copy of the Affidavit if it had confirmed it was not a bidder, whichamounts to an assertion that Swift River is the author of its own misfortune. As Swift River notes, it was not asked to provide such anundertaking and it did not have the obligation to acquire this essential information.

Rather, Pillar was obliged to serve the application andsupporting affidavits and, failing that, the Chambers judge was obliged to order that the Affidavit be provided to Swift River when askedto do so. Further, if Pillar was prepared to accede to Swift River’s request for the Affidavit on the condition that Swift River confirm thatit was not a bidder – assuming without deciding that it would have been appropriate to refuse to provide the Affidavit to Swift River if it

was – it could have proposed that solution in Chambers. [ 45 ] In any event, it is not apparent why the offer of such an undertaking would have mattered. The Chambers judge did not fail to order that the Affidavit be provided to Swift River because he was concerned that it was a bidder or that it might provide access to others. To the contrary, the Chambers judge confirmed that he would have denied the application for a sealing order regardless of whether he granted the application for an order confirming sale.

In his view, the open court principle demanded that result. [ 46 ] Pillar also contends that the order confirming sale should be affirmed even if there was a breach of procedural fairness, as the selling officer complied with the Order Nisi and entered into an agreement to sell the Montrose Lands for $300,000 in excess of the upset price. In essence, it argues that, on the facts, not knowing the case to be met made no difference, as the result was a foregone conclusion. [ 47 ] I would first note that this aspect of the appeal is about procedural fairness, not the bottom-line result.

Swift River had a right to a fair hearing regardless of whether its chances of success were strong or minimal. It had the right to make submissions as to price and sought to do so. Price was a relevant consideration. The evidence of two appraisals adduced by Swift River could have persuaded the Chambers judge that the upset price or sale price were too low and, importantly, did not account for the value of at least some of the improvements.

There was also evidence of another, higher offer. [ 48 ] Pillar appeals to the reasoning of the Chambers judge on this point, which was as follows: [23] There is no suggestion that there has been a lack of compliance, in any respect, with the directions given in the order nisi for judicial sale by real estate listing. Swift River Farms was given the opportunity to redeem as it requested. The selling officer did as he was directed.

I am satisfied from the evidence that the proper procedures were followed, and that the property had a fair exposure to potential buyers in circumstances where there was strong demand for the lands. I am satisfied that a fair price was obtained for the property. [24] Sparrow Ag Ltd.’s offer was accepted and thus subject to confirmation by this Court, there is a binding contract in place. Unless there is good reason to not approve contracts that have been entered into pursuant to a judicial sale process, courts should confirm the sales conducted in compliance with an order nisi .

It would undermine the entire judicial sale process and the vital purpose that process serves, if sales conducted in accordance with an order nisi were not confirmed. (Emphasis added) [ 49 ] This passage is consistent with the law. While the underlined portion, taken alone, would be an overstatement, it must be read together with the previous sentence, where the Chambers judge correctly recognized that a judge has the discretion to refuse to confirm a sale if there is “good reason” to do so.

To be sure, this Court has held that confidence in the fairness and integrity of the judicial sale process for both the property at issue and the judicial sale process in general are relevant considerations in determining whether a good reason to refuse has been made out: D & H Farms Ltd. v Farm Credit Canada , 2002 SKCA 88 , 214 DLR (4th) 589 [ D & H ]; and Smith Street Lands Ltd. v KEB Hana Bank of Canada , 2020 SKCA 41 at paras 38–41 , 446 DLR (4th) 605 [ Smith Street ]. [ 50 ] However, that does not mean – as Pillar appears to argue – that a court cannot refuse to grant such an order merely because the sale was conducted in accordance with an order nisi, as if following the procedural road map provided by an order nisi and getting an offer in excess of the upset price are the only live issues.

As Leurer J.A. pointed out in Smith Street : [37] The principal objective of a court-ordered sale of an asset pursuant to an order nisi is to secure the best economic return to those interested in the equity of redemption.

Generally, the measure of this is price, although other terms may impact the net economic value to be obtained from a sale. [38] The decision of this Court in D & H ties the goal of obtaining the best economic return to the maintenance of the integrity of the judicially-approved and supervised sales processes. … [ 51 ] The fact that the best economic return and the integrity of the process are tied together in this fashion does not mean that conducting the sale in accordance with an order nisi is necessarily a trump card.

The sale process is subject to court supervision and any sale agreement also requires court approval. The court hearing such an application has discretion. D & H makes it clear that this discretion is not unfettered and must be exercised cautiously. However, markets and other circumstances that impact price or other material terms of sale can change. The particulars of the offer presented and the particulars and likelihood of competing offers are relevant. For good reason, orders nisi for sale by real estate listing are not written in stone.

They can be extended and otherwise amended – including as to the upset price or terms of listing – on the application of a party. Further, a sale by tender, such as that at issue in D & H , and a sale by auction, differ from a sale by real estate listing in a manner that may be relevant on such an application. [ 52 ] In F.M.I. Developments Ltd. v 1269917 Alberta Ltd. , 2011 SKQB 240 , 380 Sask R 13 [ F.M.I. ], Smith J. offered the following

summary of the discretion of a judge hearing an application of this kind, portions of which were cited by both Swift River and Pillar: [32] The lesson I draw from D & H is that although a chambers judge has discretion on the issue of confirming a judicial sale, such discretion must be exercised cautiously.

The Court and the administration of justice have an abiding interest in maintaining commercial probity and reasonableness in any sale directed by the Court. [33] Any act or judicial fiat that detracts from commercial certainty may negatively affect the integrity of the judicial sale process. [34] Thus, if the selling officer has prima facie complied with the terms of the order nisi for judicial sale, then the order confirming such sale should be granted unless there has been manifest and substantial departure by the selling officer and/or the listing agent from commercial best practices or if the subject matter of the judicial sale was sold at an unfairly low price. [ 53 ] In Kokanee Mortgage M.I.C.

Ltd. v Rozdilsky , 2020 SKQB 52 [ Kokanee ], Danyliuk J. suggested that the following guidance should be taken from Smith J.’s

summary in F.M.I. and from the jurisprudence in this Court: [40] This “cherry picking” of the quotes from FMI results in a misleading application of that case. In fact, what Justice Smith is saying

in that case is that confirmation orders should issue unless there is cogent proof of some compelling reason not to do so. Andrew’s [the defendant’s] counsel seems to have intentionally left out paragraphs 33 and 36, as well as the review of earlier Court of Appeal authority included at paragraph 31. Reading this entire selection brings clarity and diminishes Andrew’s argument. The “discretion” discussed is the discretion to refuse a confirmation order.

The Court of Appeal authority cautions against liberal use of that discretion because it could denigrate the judicial sale process. … [ 54 ] Justice Danyliuk made an important point. The Judgment , F.M.I. and Kokanee offer helpful insights in relation to this Court’s direction as to the principles that apply in these circumstances.

Each uses somewhat different language to describe the bar that must be cleared before an application for an order confirming a sale by real estate listing which has been conducted in accordance with an order nisi and is at a price in excess of the upset price can be denied; that is, “good reason to not approve” in the Judgment (at para 24), “manifest and substantial departure … from commercial best practices or if the subject matter of the judicial sale was sold at an unfairly low price” in F.M.I. (at para 34 ), and “cogent proof of some compelling reason not to do so” in Kokanee (at para 40 ). [ 55 ] However, applications to approve a sale are fact specific, and, for that reason and given the vagaries of language, I do not consider it prudent to attempt to precisely codify the limits of an approving court’s discretion in a brief phrase: D & H at para 44.

The language of F.M.I . is too strong and specific to be applied in every case. “Good reason” and “compelling reason” better capture the wide variety of circumstances that justify denying such an application, while implicitly recognizing the importance of an order nisi and of the integrity of the judicial sale process both in the particular case and in general.

All of these cases reflect the fact that a judge hearing an application to approve a sale by real estate listing that has been carried out in accordance with an order nisi, including being at a price in excess of the upset price, should approve the sale unless they are convinced, based on evidence rather than speculation, that the factors that favour approval – including the principal objective of securing the best economic return – are clearly outweighed by those that do not. [ 56 ] Taking account of all of this, I do not agree that the appeal of the order confirming sale should be dismissed despite the failure by the Chambers judge to require that the Affidavit be provided to Swift River.

With the greatest respect, that constituted a material error of law. The outcome of the application was not a foregone conclusion. The appropriate remedy in light of this error is to set aside the order approving sale. C. Did the Chambers judge err in law by concluding that Mr. Lingnau’s interest under the Lingnau leases would be foreclosed notwithstanding the provisions of The Land Titles Act, 2000 ? [ 57 ] Although the Lingnau leases have now expired, the finding by the Chambers judge that Mr.

Lingnau’s interest under the Lingnau leases would be foreclosed rests on his conclusion as to a significant point of law. For that reason, I will address it. [ 58 ] I would also note that despite his express misgivings, it was appropriate for the Chambers judge to decide the issue. The Sparrow agreement provided, and thus the Chambers judge ordered, that Sparrow’s title would be clear of the Lingnau leases. If Mr.

Lingnau’s interest pursuant to the Lingnau leases was not subject to foreclosure by reason of these provisions of The Land Titles Act, 2000 , the selling officer could not enter into an agreement to sell the Lands free and clear of the Lingnau leases and the Chambers judge could not approve a sale which provided that Mr. Lingnau’s interest be foreclosed.

As such, the Chambers judge had to decide the answer to this question before granting the order confirming sale. [ 59 ] The priority at common law as between a mortgagee and a lessee is correctly described in the following passage from Victor Di Castri, Registration of Title to Land , loose-leaf (Rel 2007-9), vol 1 (Toronto: Thomson Carswell, 1987) at 12-37: [308] “At common law, if there was a lease prior to a mortgage and it was still subsisting, the mortgagee would have the same rights as, but no greater rights than, the mortgagor had against the lessee.

This would be so, although the conveyance by way of mortgage was expressed to be a conveyance of the full fee simple and whether or not the mortgagee had notice of the lease, for the prior legal right of the lessee would prevail against the rights of the mortgagee. But a lease subsequent to the mortgage would stand in a different position.

Unless it bound the mortgagee because of his express concurrence in it or because of the powers conferred on the mortgagor by the terms of the mortgage or by the statute, the mortgagee could ignore it and treat the lessee as a trespasser and bring ejectment against him.” [ United Starr-Bowkett Co-op Bldg.

Soc. (No. 11) Ltd. v Clyne , [1968] 1 NSWR 134 at 146, per Walsh J.A.] The lease would confer, at most, a right in the lessee to redeem the mortgaged property. [See, e.g., Capital Trust Corp. v McGuigan , [1934] OWN 656 (WL) .] (Emphasis in original) [ 60 ] Indeed, if a mortgagor granted a lease without the authority of the mortgagee, the common law held that the lease was “merely a partial transfer of the equity of redemption”: Domus Architects v Bank of China (Canada) (1997), 45 OCT 97 (WL) (Ct

J) at para 30 [ Domus ], citing W.B. Rayner & R.H. McLaren, Falconbridge on Mortgages , 4th ed (Agincourt, Ont: Canada Law Book Limited, 1977) at 320–321. As such, the tenancy was subject to the mortgage and at most conferred on the tenant the right to redeem the mortgaged property: CIBC Mortgage Corp. v Burkmarsh Investments Ltd. , 1994 CarswellOnt 6171 (WL) at para 4 , referring to Capital Trust Corporation v McGuigan , [1934] OWN 656 (WL) . [ 61 ] It follows from this that Mr.

Lingnau’s interest in the equity of redemption would have been subject to foreclosure pursuant to a prior mortgage under the common law. Accordingly, his interest would also have been subject to being removed as a result of a judicial sale in an action pursuant to Pillar’s mortgage, which was registered before Swift River entered into the Lingnau lease.

That is so because a judge of the Court of Queen’s Bench has undoubted authority to grant an order for judicial sale in a foreclosure action – a remedy which did not generally exist at common law – pursuant to the Chancery Procedure Amendment Act , 1852 (UK), 15 & 16 Vict, c 86, s 48, as modified by The Queen’s Bench Act, 1998 and The Queen’s Bench Rules : see Goertz . [ 62 ] As an aside, I note that the law called for a different result if the subsequent lease was entered i nto by the authority of the mortgagee or pursuant to an express power to lease contained in the mortgage : Walter M.

Traub, Falconbridge on Mortgages , loose-leaf (Rel 1, 5/2022) 5th ed (Toronto: Thomson Reuters, 2022) at §15:18; Domus at para 30; and 433414 Ontario Ltd. v Lehndorff Property

Management Ltd. (1981), (ON SC), 31 OR (2d) 769 (WL) (Ct

J) at para 12. Here, it may be arguable that there was anexpress power in the mortgage to lease in the ordinary course of business and that the Lingnau lease was such a lease. That issue isaddressed further below.

This portion of the analysis is concerned solely with the land titles issue and assumes that the Lingnau leaseswere not made pursuant to an express power in the mortgage or by the authority of the mortgagee. [63] The question, accordingly, was that considered by the Chambers judge; that is, does The Land Titles Act, 2000 change thecommon law in this respect, resulting in priority over a prior mortgage for an unregistered lease for a term not exceeding three years wherethe lessee occupies the property? [64] In my view, it does not.

The starting point is that, as noted above, foreclosures and applications for judicial sale continue inSaskatchewan despite the changes to real property law resulting from The Land Titles Act, 2000 and the constraints imposed by otherprovincial legislation, including the Act.

Section 132 of The Land Titles Act, 2000 expressly provides that proceedings may be brought toforeclose an interest in land or to sell mortgaged land. Further, as the Court noted in Goertz, “the pre-existing common law judgments stillapply in respect of the general nature of the right to judicial sale” (at para 19). [65] Like the Chambers judge, I am not persuaded that there is any conflict between the provisions of The Queen’s Bench Act, 1998and The Queen’s Bench Rules relating to orders for sale and ss. 13(1)(a), 14 and 18(1)(

d) of The Land Titles Act, 2000. I reach thatconclusion based on the effect of s. 18(1)(d) – which is the key to this question – in relation to the priority between a lease described inthat provision and prior registered mortgage. My reasons are as follows. [66] The purpose of The Land Titles Act, 2000, like its predecessors, and the significance of the registry, were summarized by theCourt in Dunnison Estate v Dunnison, 2017 SKCA 40, [2017] 8 WWR 18 [Dunnison]: [75] In

summary, the purpose of our land titles legislation is to provide certainty of title and to protect persons who acquire an interestin land bona fide, for value and in reliance on the register from unregistered or hidden claims. In our view, however, that is not its onlypurpose. The legislation also establishes a predictable method of registering interests in land within an established framework.

A series oflegislative and regulatory provisions create a system upon which persons rely daily to search the registry and make personal and businessdecisions. [67] This passage emphasizes that the registry is generally conclusive. However, this does not mean that the question as to whatinterests exist in relation to real property and the priority between those interests can be answered solely on the basis of the registry.

Asthis Court noted in Primrose Drilling Ventures Ltd. v Registrar of Titles, 2021 SKCA 15, [2021] 8 WWR 241: [42] … [G]enerally, a purchaser of real property can rely on the register to determine who has title and what other registered interestsexist in, over or under the land that is the subject of the title. It is also the case that title will generally pass to the new owner free ofunregistered interests. However, as I have noted, it is an overstatement to suggest that the registry is everything. The legislation and thecase law make that clear. The description of the property in the registry is not everything.

Just as indefeasibility has exceptions, so too dothe mirror and curtain principles that are often said to describe the effect of registration. [68] Section 18(1)(

d) of The Land Titles Act, 2000 is one such exception. A lease caught by s. 18(1)(

d) need not be registered inorder to be effective as against a party that acquires title or registers some other interest after the lease is effective. That is so because, asnoted above, s. 18(1) provides that “every title and the land for which the title has issued, is, by implication and without any specialmention in the title, deemed to be subject to” – among other things: (

d) any subsisting lease or agreement for lease for a term not exceeding three years where there is actual occupation of the land for whichtitle has issued pursuant to the lease or agreement[.] [69] However, the fact that a s. 18(1)(

d) lease need not be registered to be effective against subsequent registered interests does notmean that a lessee pursuant to such a lease acquires a greater interest as against prior interest holders than it would have had in the absenceof that provision. A lease for a term of five years, for example, is subject to a prior registered interest. So too is a three-year lease. Thedifference between them is that a five-year lease – unlike a s. 18(1)(

d) lease – must be registered to be effective as against a subsequentinterest holder, including a subsequent mortgagee.

That is so as a result of ss. 25 and 27, which provide that registration is required andthat priority between registered interest holders is determined by the time of registration: Registration required 25(1) Except as against the person making it, an instrument purporting to transfer, assign, charge, deal with or affect any title, interest, orland for which title has issued, does not operate to create or convey any title or interest until an application for registration of a transfer oftitle or an application for registration of an interest based on that instrument is registered in accordance with this Act. … Priority 27(1) Transfers or interests that are registered with respect to or affecting the same title or interest have priority, the one over the other,according to the time assigned to them at the land titles registry, and not according to: (

a) the date of execution of the instrument; (

b) the date of execution of the application; (

c) the time of submission of the application to the land titles registry; or (

d) the order in which they appear on title.

… [ 70 ] How, then, does this exception to the requirement to register affect the right of a prior mortgagee to foreclose a s. 18(1)(

d) lessee and the concomitant authority of a court to order that land be sold free and clear of that lease? In my view, not at all. Neither s. 132 nor any other

section of The Land Titles Act, 2000 purports to change the law as it relates to a mortgagee’s rights as against a subsequent lessee. Those rights turn on the nature and priority of the interests in question. A lessee under a s. 18(1)(

d) lease does not acquire a greater interest, and a prior registered mortgagee’s rights are not reduced, merely because such a lessee is not required to register their interest to have priority over subsequent interest holders or to retain their interest when title transfers. A prior mortgagee can choose to pursue foreclosure, or the remedy of an order for sale and, in due course, a court may grant a final order that forecloses a lease such as that granted to Mr. Lingnau or grants the alternative remedy of an order confirming a sale free and clear of that lease. Once that foreclosure or sale has been completed, there would be no subsisting lease within the meaning of s. 18(1)(

d) and thus no implied interest to which the title could be subject pursuant to s. 14. [ 71 ] Swift River advanced two other arguments in this context. It submitted that if s. 18(1)(

d) leases could be foreclosed in this fashion, so too could all of the exceptions, reservations and interests listed in s. 18(1). Swift River’s position is based on the incorrect premise that if a mortgagee can obtain an order to foreclose any interest listed in that section, it necessarily follows they must be able to foreclose every interest.

To the contrary, my conclusion as to the Lingnau leases is based on the nature of and relationship between the particular interests in question; that is, a registered mortgage and a subsequent short-term lease that was not entered into by the authority of the mortgagee or pursuant to an express power to lease contained in the mortgage. The same kind of particularized analysis would be necessary in relation to any other exception, reservation or interest listed in s. 18(1). [ 72 ] I will note two examples to illustrate this point: (

a) The exceptions, reservations and interests listed in s. 18(1)(

b) are interests that need not be registered to have priority because federal or Saskatchewan legislation so provides. That is clear from the language of s. 18(1)(b): 18(1) Subject to subsection (2), every title and the land for which the title has issued, is, by implication and without any special mention in the title, deemed to be subject to the following exceptions, reservations and interests: … (

b) any right or interest granted by or pursuant to an Act or

an Act of the Parliament of Canada that does not have to be registered: (

i) to enter, go across or do things on land, including an easement or right of way, for the purposes specified in the enactment; (ii) to recover taxes, duties, liens, charges, rates or assessments by proceedings with respect to land; (iii) to expropriate land; (iv) to restrict the use of land; or (

v) to control, regulate or restrict the subdivision of land; … Accordingly, the exception for these statutory rights and interests reflects the rights granted by other legislation.

Section 33 of The SaskEnergy Act , SS 1992, c S-35.1 , for example, provides that SaskEnergy may enter land for the purpose of, among other things, maintaining and inspecting pipelines, where a current or previous owner of the land granted permission to construct the pipeline. Section 33(3) confirms that this right exists regardless of registration, providing as follows:

(3) The corporation’s right to enter on a parcel pursuant to subsection (2) exists whether or not an interest based on an easement covering the pipeline is registered in the name of the corporation against the title to the parcel. (

b) The interest granted to a tenant by a subsisting residential tenancy pursuant to s. 18(1)(

e) is also protected by other legislation. Section 38(1) (

b) of The Residential Tenancies Act, 2006 , SS 2006, c R-22.0001 , defines “new landlord” as including the following: (iii) the purchaser at a judicial sale of the residential property of a former landlord; (iv) a mortgagee of the residential property of a former landlord who: (

A) acquires title to the residential property by foreclosure or pursuant to a judicial sale of the residential property; or (

B) enters into possession of the residential property; and includes the assigns of that mortgagee; … Section 38(2), in turn, provides that “a new landlord has the same rights, and is subject to the same liabilities and obligations, as the former landlord pursuant to this Act with respect to all subsisting tenancy agreements and all security deposits held in trust by the former landlord”. Accordingly, the exception for residential tenancies listed in s. 18(1)(

e) reflects the priority accorded to tenants by The Residential Tenancies Act, 2006 . [ 73 ] These two examples are sufficient to demonstrate that the fact a mortgagee has priority over and thus can foreclose the interest

of a s. 18(1)(

b) lessee does not mean that a mortgagee can foreclose all of the interests, reservations and exceptions specified in s. 18(1). [74] Swift River also relied on s. 139 of The Land Titles Act, 2000, which is as follows: 139 No lease for a term of more than three years of mortgaged land is valid as against the mortgagee unless the mortgagee: (

a) has consented in writing to the lease before registration of the lease; or (

b) subsequently adopts the lease. [75] It was Swift River’s position that this provision strongly implies what it describes as a corollary rule; that is, that all leases for aterm of three years or less are valid as against a mortgagee. [76] With respect, I am of a different mind.

Section 139 demonstrates that the Legislature turned its attention to the question ofwhether a lease takes priority over a prior mortgagee and chose to adopt a statutory rule as to leases for a term of three years or more. Thefact that it did not specify that leases for a term of three years or less are “valid as against a mortgagee” regardless of consent from oradoption by the mortgagee demonstrates that it did not intend to adopt such a rule.

To the contrary, it supports the conclusion that validityof a lease of three years or less as against a mortgagee is to be determined on the basis of the common law rule. [77] Further, the premise underpinning Swift River’s position on this point is that s. 139 deals with leases for more than three years,and s. 18(1)(

d) deals with those that are three years or less. However, s. 18(1)(

d) creates an “exception” for subsisting leases or agreementleases for a term of three years or less only if there is actual occupation pursuant to the lease or agreement. It does not draw a line basedsolely on the length of the term, and, for that reason, is not the other side of the coin. [78] I would finally note that this

interpretation of these provisions of The Land Titles Act, 2000 accords with the modern principleof statutory

interpretation, which applies to all Saskatchewan legislation: The Legislation Act, SS 2019, c L-10.2, s 2-10; and Rizzo &Rizzo Shoes Ltd. (Re), (SCC), [1998] 1 SCR 27. It interprets the relevant provisions in their grammatical and ordinarysense and in light of the purpose of the Act and the intention of the Legislature as described in Dunnison. [79] In the result, I conclude that the Chambers judge did not err in finding that Mr. Lingnau’s interest in the Lands was subject tobeing foreclosed. D.

Did the Chambers judge err by deciding that there were no exceptionalcircumstances that would justify an order setting aside the Order Nisi? [80] Swift River correctly concedes that the Chambers judge’s decision as to whether there were exceptional circumstances thatwould justify an order setting aside the Order Nisi was discretionary.

The standard of review applied on an appeal of such a decision isthat specified in Kot v Kot, 2021 SKCA 4, 63 ETR (4th) 161: [20] … [A]ppellate intervention in a discretionary decision is appropriate where the judge made a palpable and overriding error in theirassessment of the facts, including as a result of misapprehending or failing to consider material evidence. Appellate intervention is alsoappropriate where the judge failed to correctly identify the legal criteria which governed the exercise of their discretion or misappliedthose criteria, thereby committing an error of law.

Such errors may include a failure to give any or sufficient weight to a relevantconsideration. See also: S.B. v T.B., 2022 SKCA 65 at para 28; Taylor v Moose Jaw Downtown and Soccer/Field House Facilities Inc. (Mosaic Place),2021 SKCA 123 at para 14; and Amalgamated Transit Union, Local 615 v Saskatoon (City), 2021 SKCA 93 at para 129. [81] Swift River’s principal submissions on this point relate directly or indirectly to the Chambers judge’s treatment of theforbearance agreement.

Swift River submits that the forbearance agreement was null and void pursuant to s. 105(2) of the Act or, in thealternative, was void for uncertainty. It says that the Chambers judge erred by deciding that it was an enforceable agreement and byfailing to deal with the uncertainty argument.

It argues that these errors are of great import, as its erroneous belief that the forbearanceagreement was legally binding led it to fail to take steps to protect its interests, including by filing a statement of defence, taking issue withamounts that it submits were improperly included in the amount payable to redeem the mortgage, and disputing the valuation of the Landspresented by Pillar. [82] I would first note that the fact the Chambers judge treated the forbearance agreement as binding is of little, if any, significance.The Chambers judge saw the forbearance agreement as simply “an acknowledgement that the mortgage debt was due and owing and butfor the forbearance period granted, Pillar was entitled to foreclose” (at para 21(c)).

There appears to be no dispute that this was so. Further,the central point of his analysis was that Swift River, believing as it did that it had a solution on the horizon, got what it bargained for; thatis, a delay in the foreclosure proceedings. Pillar, in turn, relied on and carried out its part of the agreement. [83] These facts weighed heavily against Swift River in the Chambers judge’s exceptional circumstances analysis.

I conclude, basedon his reasons as a whole, that the Chambers judge would have accorded the same weight to these facts regardless of whether he hadconcluded that the forbearance agreement was not legally binding. My conclusion is buttressed by, among other things, the followingstatement in the Judgment, which emphasized that other parties had relied on the process agreed to by Swift River: [21] … h. the order nisi for judicial sale by real estate listing has been acted on and relied upon by a number of parties.

Some of those parties willsuffer significant prejudice if the judicial sale process is either interrupted or stopped at this stage. The policy considerations and issues offairness and equity call for the judicial sale process to proceed in the normal course and as previously directed by this Court; … [84] The Chambers judge also considered it to be important that, in his view, the forbearance agreement did not purport to preclude

Swift River from making submissions as to the amount owing pursuant to the mortgage and other terms in the Order Nisi. That was areasonable

interpretation. A mortgagor need not enter a statement of defence in order to make representations as to the terms of an ordernisi, including the length of the redemption period, the price and other terms on which the property is listed, the identity of the sellingofficer or listing agent, and the upset price. Swift River could have filed the two appraisals at the Order Nisi stage. Swift River was awarethat it could make representations.

Although the evidence on this point is thin, it is clear it did so as to the redemption period and it mayhave done so as to the value of the Lands. [85] Swift River also took issue with the fact that the Chambers judge concluded that it had breached clause 5.2(

b) of its loanagreement with Pillar by entering the Lingnau leases. It is clear that this factor – as well as his related conclusion that leasing the Landsdespite the foreclosure proceeding – may have been contemptuous of the Order Nisi, weighed against Swift River in the analysis. [86] The Chambers judge dealt with this issue at paragraph 21(

g) of the Judgment. His analysis is very brief. I am unable to saywhether he considered the surrounding circumstances as required by Sattva Capital Corp. v Creston Moly Corp., 2014 SCC 53, [2014] 2SCR 633, including that Swift River was in the business of leasing out farmland and had leased out the Montrose Lands to Mr. Lingnau inthe past. On the face of it, it appears he did not do so.

That is apparent from the following statement made by the Chambers judge, which Iunderstand as one of general principle rather than one relating to the loan agreement, interpreted as a whole and in light of the surroundingcircumstances: [21] … g. … A lease of the lands when they are in the process of a judicial sale is the antithesis of a transaction in the ordinary course of businessand can be appropriately viewed as an improper and potentially illegal act on the lessor’s part[.] [87] In the result, it is my respectful opinion that the Chambers judge erred in law in his

interpretation of clause 5.2(b). [88] However, I am not persuaded that this was a material error, regardless of whether the Chambers judge was correct inconcluding that there had been a breach of clause 5.2(b) – which I need not decide. A judgment or order may be set aside where equity andfairness so require, as a result of circumstances such as fraud, lack of jurisdiction, irregularity, perjury, new evidence and lack of notice:Shell Canada at para 9; Toronto Dominion Bank v Tymchak (1990), (SK KB), 85 Sask R 192 (QB) at para 7; RoyalTrust Company v E.M.

Jones, (SCC), [1962] SCR 132 (WL) at 143–146; and Desbiens v Warken, 2020 SKQB 145 atparas 13–17, 61 CPC (8th) 187. While an error of law may be relevant in determining if there are special circumstances of this kind, thefact there was an error of law in the course of the analysis does not, in and of itself, justify setting aside a judgment or order. As Tholl J.(as he then was) affirmed in Montgomery v Jahnke, 2017 SKQB 374: [29] The inherent jurisdiction of the court with regard to setting aside judgment, declarations or orders obtained on the merits must beused sparingly and only in exceptional circumstances.

The court must be cautious to ensure it avoids overstepping its jurisdiction resultingin effectively sitting in appeal of its own determinations. … [89] It is clear that the Chambers judge concluded, based on the circumstances as a whole – including Swift River’s decision tolease the Montrose Lands only after it had the full benefit of what it now claims was an illegal bargain, after the redemption period hadexpired, and after the Lands were listed for sale – that this was not such a case.

That is most strikingly demonstrated in his conclusion thatthere were “no fairness or equity considerations favouring Swift River” (at para 21(i)). I am satisfied that the Chambers judge would havereached the same conclusion on the fairness and equity of the matter, and on the bottom line, even if he had concluded that Swift Riverwas entitled to enter the Lingnau leases. Put differently, his error in the analysis of clause 5.2(

b) did not materially contribute to or result inthe misapplication of the criteria governing the exercise of his discretion. [90] For these reasons, I conclude that the Chambers judge did not err in deciding there were no exceptional circumstances thatwould justify setting aside the Order Nisi. V. CONCLUSION [91] In the result, I would allow Swift River’s appeal of the order confirming sale and deny the appeal of the order dismissing theapplication to set aside the Order Nisi. However, I note that the Order Nisi was made October 27, 2020, and that the order confirming salewas made April 21, 2021.

It is, of course, for Pillar to decide if it wishes to proceed with its application for an order confirming sale –assuming that the mortgage is still in default – keeping in mind that, whatever else has transpired, 15 months have now passed since theconditional sale to Sparrow was brought to the Court for approval. [92] Given that success on this appeal has been mixed, there shall be no order as to costs. “Barrington-Foote J.A.” Barrington-Foote J.A.I concur. “Richard C.J.S.” Richards C.J.S.I concur. “Caldwell J.A.” Caldwell J.A.