MFI Ag Services Ltd., Joe Melnick v. 101279112 Saskatchewan Ltd., 2023 SKCA 10

Court of Appeal for Saskatchewan Docket: CACV4053 Citation: MFI Ag Services Ltd. v Kramer Ltd. , 2023 SKCA 10 Date: 2023-01-17 Between: MFI Ag Services Ltd., Joe Melnick and 101279112 Saskatchewan Ltd. Appellants (Applicants) And Kramer Ltd. Respondent (Respondent) Before: Leurer, Tholl and Kalmakoff JJ.A. Disposition: Appeal dismissed Written reasons by: The Honourable Mr. Justice Kalmakoff In concurrence: The Honourable Mr. Justice Leurer The Honourable Mr.

Justice Tholl On appeal from: 2022 SKQB 178 , Regina Appeal heard: November 30, 2022 Counsel: Deron Kuski, K.C. and Michael Marschal for the Appellants Jeff Grubb, K.C. and Brooklyn Ireland for the Respondent Kalmakoff J.A. I.

INTRODUCTION [ 1 ] MFI Ag Services Ltd. [MFI], Joe Melnick, and 101279112 Saskatchewan Ltd. [101] [collectively the appellants], appeal against a decision in which a Court of Queen’s Bench judge, sitting in Chambers, ordered them to deliver certain farm equipment to Kramer Ltd., pursuant to the provisions of The Saskatchewan Farm Security Act, SS 1988-89, c S-17.1 [ SFSA ] ( MFI Ag Services Ltd. v Kramer Ltd. , 2022 SKQB 178 [ Decision ]). [ 2 ] The appellants say the Chambers judge erred by holding that Kramer Ltd. was not statute-barred from recovering the farm equipment in question.

In the alternative, they contend that even if Kramer Ltd.’s ability to recover the equipment was not precluded by the expiry of a limitation period, the Chambers judge erred by ordering that the equipment be returned instead of determining a reasonable purchase price for the equipment or adjourning the hearing so that a reasonable purchase price could be determined. [ 3 ] I am not persuaded that the Chambers judge made either of the errors the appellants allege. The appeal must be dismissed. My reasons follow. II. BACKGROUND [ 4 ] Mr. Melnick is a farmer.

He is also the director of the two corporate appellants, MFI and 101. [ 5 ] On August 13, 2016, 101 entered into a one-year Ag Equipment Rental Agreement with Northwest Parts & Service, an agent of Kramer Ltd. The equipment that was the subject of the rental agreement included a combine, a pickup header and a straight cut header. Mr. Melnick took delivery of the equipment for 101 on August 15, 2016. On September 22, 2016, MFI entered into a one-year Ag Equipment Rental Agreement with Kramer Ltd. That rental agreement concerned a second combine, pickup header and straight cut header. Mr.

Melnick took delivery of that equipment for MFI on September 25, 2016. It is a term of both rental agreements that Kramer Ltd. shall retain title to the equipment. [ 6 ] The appellants contend that, collaterally to the rental agreements, there existed a verbal agreement that Mr. Melnick would have an option to purchase the equipment when the rental agreements expired. In this regard, Mr. Melnick stated in an affidavit that he had “a verbal commitment that [he] could buy the Equipment for a fair price if [he] wanted after the one year term”. According to Mr.

Melnick, an unspecified portion of the rental payments was to “be applied to the purchase price but [the] purchase price was never defined or agreed to”. For its part, Kramer Ltd. does not dispute that there was a side-deal relating to the sale of the equipment. However, as I will come to, its view of what the terms of that side-deal were differ significantly from what is described by Mr. Melnick. [ 7 ] As the expiration of the rental agreements approached, Mr. Melnick had discussions with representatives of Kramer Ltd. about purchasing the equipment.

During the discussions, Kramer Ltd. took the position that the sale of the equipment was to be at a global price of $502,000, being the “Value of Equipment for Insurance” as set out in the rental agreements, less any rent payments that had been made. For his part, Mr. Melnick took the view that no purchase price had been fixed but, instead, the parties had agreed that he would pay a “reasonable” or “fair” price for the equipment, if that price met with his approval. Mr.

Melnick acknowledged that his attempts to obtain third-party financing for the purchase price had failed, and that he and Kramer Ltd. never reached an agreement on what a “fair price” would be. [ 8 ] On November 16, 2017, Tim Kramer wrote an e-mail to Mr. Melnick, on behalf of Kramer Ltd., to demand payment of the

purchase price. He said: Joe – these units were to be converted in 2016. I ask that you make [arrangements] with your bank to set up financing for these so I can clear my books before year end 2017. [ 9 ] Mr. Melnick replied by e-mail that same day. He said: I’m working on it as we speak Tim. I will be in touch. [ 10 ] Despite making that representation, Mr. Melnick made no further payments to Kramer Ltd., either for the use of the equipment or towards its eventual purchase. Mr. Kramer demanded payment again by e-mail on May 2, 2018. Mr.

Melnick did not reply, and, despite his non-payment, the equipment remained in his possession. [ 11 ] No further action appears to have been taken until Mr. Kramer sent additional e-mails demanding payment from Mr. Melnick, in March, May, June, November and December of 2020. Several of these e-mails reiterated Kramer Ltd.’s view that it was owed $502,000 for the equipment and requested that Mr. Melnick provide payment as well as proof of insurance for the equipment. There is no record of Mr.

Melnick having responded to any of these e-mails until November 23, 2020, at which time he sent an e-mail explaining that he had suffered a serious accident, from which he had not yet fully recovered, and stating that he intended to provide payment and proof of insurance in the near future. Mr. Melnick made similar representations in e-mails sent to Mr. Kramer on December 22, 2020, March 4, 2021, and June 18, 2021, but still made no payments toward the purchase of the equipment. [ 12 ] Finally, in January of 2022, Kramer Ltd. took steps to recover possession of the equipment.

It served the appellants with notices of seizure, in the form of a Notice of Intent by Secured Creditor under the Farm Debt Mediation Act , SC 1997, c 21 , Notice of Intention to Take Possession under the SFSA , and Notice of Intention to Enforce Security under the Bankruptcy and Insolvency Act , RSC 1985, c B-3 . The notices each referred, rather ambiguously, to agreements dated August 13, 2016, and September 22, 2016, without specifying whether this was intended to be a reference to the written rental agreements or agreements that were collateral to them.

However, the notice under the SFSA referred to “arrears” in the amount of $502,000, and a claim for interest of $39,482.01, for a total indebtedness of $541,482.01.

Since the rental agreements did not contain any provisions dealing with the sale of the equipment — or at least the parties did not suggest that such a term existed in the very imperfectly copied versions of these agreements that were adduced into evidence — the implication of the notices would appear to be that Kramer Ltd. was claiming an amount that was due and payable under contracts that were collateral to the written rental agreements. [ 13 ] After they had been served with these notices, the appellants applied, under s. 50 of the SFSA , for a hearing.

By this point, the appellants had been in possession of, and had used, the equipment, through the 2018, 2019, 2020 and 2021 farming season, all without making any payment to Kramer Ltd. for its use or towards its eventual purchase. [ 14 ] Both sides to the dispute filed affidavits. Together, they provided the background, as I have reviewed it. The affidavit of Mr. Kramer estimated the current value of the equipment to be $304,000. Mr. Melnick estimated it to be between $140,000 and $150,000. Mr. Kramer also explained the delay in taking steps to seize the equipment.

As summarized by the Chambers judge the delay was “attributable to relationships of family and friendship” ( Decision at para 45). [ 15 ] The hearing proceeded before the Chambers judge. The appellants took the position that Kramer Ltd.’s claim to the equipment was statute-barred under The Limitations Act , SS 2004, c L-16.1 . They staked the alternative position that, if the limitation period did not apply, they remained willing to purchase the equipment following completion of the 2022 harvest, as long as a reasonable purchase price could be agreed to or determined to their satisfaction.

The appellants also argued that the hearing should be postponed until a separate hearing could be held under the SFSA to determine what a reasonable purchase price would be. Kramer Ltd. contended that the equipment should be returned to it immediately, as the appellants had retained the equipment and benefitted from its use, even though the rental agreements had expired several years earlier, and they had made no payments since their expiry. [ 16 ] The Chambers judge dealt first with the limitation period issue.

He concluded that The Limitations Act did not apply to the proceeding under the SFSA for three reasons: (

i) the proceeding under the SFSA had not been commenced by a statement of claim or originating application and, therefore, the limitation periods set out in The Limitations Act were not invoked; (ii) Kramer Ltd. was the respondent in the hearing before him; and (iii) there was no dispute over the fact that Kramer Ltd. still owned the equipment ( Decision at paras 21–25). The Chambers judge also observed that, even if The Limitations Act applied, Kramer Ltd.’s claim for recovery would likely not have been statute-barred, because Mr.

Melnick had acknowledged his indebtedness within the limitation period (at para 26). [ 17 ] The Chambers judge then addressed, and rejected, the appellants’ invitation to postpone the hearing of the application and hold a hearing to determine a reasonable purchase price. After canvassing the provisions of s. 10(2) of The Sale of Goods Act , RSS 1978, c S-1 and s. 53(4) of the SFSA that the appellants had argued provide the authority for such a measure, he said: [29] The parties are far apart in what the purchase price should be. Kramer says it is owed $541,482.01. Mr.

Melnick says there was never any agreement on a purchase price. He suggests a current purchase price of $140,000 - $150,000. I pause here to observe that it is difficult to square Mr. Melnick’s claim that there was no agreement on a purchase price with his affidavit evidence that he had tried to get financing for purchase of the farm equipment. The first question of any lender would be “how much?” [30] Mr. Melnick says that if the purchase price is established to be much more than $150,000, then he would decline to purchase and instead return the farm equipment after harvest is completed.

Kramer, with reason, has given up on seeking repayment and asks that the farm equipment be returned. Scheduling a hearing to determine the amount remaining unpaid under the agreement would seem to serve no real purpose other than to cause further delay. I therefore decline to do so. [ 18 ] With that sorted, the Chambers judge turned to consider what order would be just in the circumstances, as required by s. 53(1) of the SFSA .

After reviewing the statutory framework governing that determination and citing relevant authorities including Naber v John Deere Financial Inc. , 2020 SKCA 94 , 454 DLR (4th) 81 [ Naber ]; Bauck v Farm Credit Canada , 2020 SKQB 184 ; and De Lage Landen Financial Services v Shewchuk , 2020 SKQB 332 ; he turned to the factors enumerated in Bartko v Odnokon Holdings Ltd. , 2012 SKQB

262 , 400 Sask R 200 [ Bartko ], and examined them in light of the evidence before him. I will review this part of the Decision later in these reasons.

After doing so, the Chambers judge concluded that “it is just that Kramer recover its depreciated property and that recovery not be further delayed” ( Decision at para 46). [ 19 ] In the result, the Chambers judge ordered that the farm equipment in question be delivered immediately to Kramer Ltd. [ 20 ] The appellants filed a notice of appeal with this Court on August 4, 2022, and, under Rule 15 of The Court of Appeal Rules (as it then was) the Chambers judge’s order for delivery of the equipment was automatically stayed. Kramer Ltd. applied to lift the stay.

On August 24, 2022, McCreary J.A. placed conditions on the continuation of the stay, one of which required the appellants to pay $80,000 into an interest-bearing account, to be held pending the determination of this appeal ( MFI AG Services Ltd., Melnick and 101279112 Saskatchewan Ltd. v Kramer Ltd. (24 Aug 2022) Regina, CACV4053 (Sask CA) [ CA Chambers Fiat ]). III. ISSUES AND STANDARD OF REVIEW [ 21 ] This Court has jurisdiction to hear this appeal pursuant to s. 7(3) of The Court of Appeal Act, 2000 , SS 2000, c C-42.1 and s. 106 of the SFSA .

Under s. 106 of the SFSA , appeals to this Court are restricted to questions of law only. Questions of law attract a standard of review of correctness ( Herrnbock v Input Capital Corp. , 2020 SKCA 120 at paras 6–7 ; Naber at para 15 ). [ 22 ] When the appellants’ arguments are considered as questions of law, they give rise to two issues. In addition, this Court has been left to determine what is to be done with the $80,000 paid into court pursuant to the CA Chambers Fiat . Considering all of this, this Court must answer three questions: (

a) Did the Chambers judge err in law by holding that Kramer Ltd.’s ability to seek recovery of the equipment under the SFSA was not statute-barred? (

b) If Kramer Ltd.’s ability to recover the equipment under the SFSA was not statute-barred, did the Chambers judge err in law by ordering return of the equipment instead of determining a reasonable purchase price or holding a separate hearing for that purpose? (

c) What order should be made regarding the money paid under the CA Chambers Fiat ? IV. ANALYSIS A. Did the Chambers judge err in law by holding that Kramer Ltd.’s ability to seek recovery of the equipment under the SFSA was not statute barred? [ 23 ]

Part IV of the SFSA is titled “Possession of Equipment”. It establishes a regime that must be followed when a “secured creditor” seeks to seize farm equipment. In this regard, s. 48 of the SFSA states that a “secured party intending to take possession of an implement shall serve the notice prescribed in the regulations on the farmer”.

It was the service of this notice by Kramer Ltd. that started the chain of events that led to the hearing that resulted in the Decision . [ 24 ] The appellants’ primary argument is that, at the time Kramer Ltd. sought to seize the equipment under the provisions of the SFSA , it had no lawful authority to do so. This, the appellants say, is because seizure of equipment under the SFSA is premised on the owner having a valid security interest in the equipment, and a valid security interest cannot exist where no debt is owing.

They take the position that, because Kramer Ltd. did not take steps to enforce the debt owing by them within two years of that debt becoming due, any claim that Kramer Ltd. may have had was statute-barred by The Limitations Act , meaning the debt was effectively extinguished. They allege the Chambers judge erred in law by finding to the contrary. [ 25 ] The starting premise of the appellants’ argument — that a valid security interest depends on the existence of an outstanding debt — is a false one.

In this regard, “security interest” is defined in s. 2(1) (aa) of the SFSA as meaning “an interest in personal property that secures payment or performance of an obligation ” (emphasis added). In this case, in addition to securing amounts owing under the rental agreements, and potentially an agreement for sale, should there be one, Kramer Ltd.’s security interest secured the appellants' obligation to return the equipment following the expiration of the leases’ terms, if a sale did not proceed.

This latter point is important in the context of this appeal and assists in demonstrating why, at the end of the day, the appellants’ arguments must be rejected. [ 26 ] Furthermore, if the logic of the appellants’ arguments is followed to its conclusion, there has never been a debt owing by them to Kramer Ltd., in the relevant sense, regardless of the applicability or non-applicability of a limitation period. The rental agreements had expired, and no money remained owing under those agreements.

And, if the appellants’ position is accepted, no debt had yet become owing to Kramer Ltd. under an agreement for sale, because a “reasonable” or “fair” price that was satisfactory to Mr. Melnick had not yet been determined, which raises a serious question as to whether any limitation period had begun to run in relation to any debt claim relating to the agreement that the appellants allege exists. [ 27 ] Moreover, the appellants do not dispute that, whatever the other terms of the sale-purchase agreement might have been, Kramer Ltd. would retain ownership of the equipment until the purchase price was paid in full.

Since the purchase price had not been paid, Kramer Ltd. still owned the equipment and, by serving notice under s. 48 of the SFSA , had effectively demanded its return. Because the appellants did not return the equipment, Kramer Ltd. might, arguably at least, have a claim for its use by the appellants or a claim in detinue.

In either case, there is an argument that the applicable limitation period began to run on a date, or dates, that is later than what the appellants assert to be the case. [ 28 ] Nonetheless, there is no need to decide these issues because, in my respectful view, the Chambers judge correctly determined that The Limitations Act does not apply to a proceeding under

Part IV of the SFSA . Let me now explain this conclusion.

[ 29 ] Setting aside certain well-defined exceptions, The Limitations Act bars the commencement of proceedings more than two years from the day on which a claim is discovered. Not all legal proceedings, however, are subject to the limitation periods that are established in that statute. In that regard, s. 3(1) of The Limitations Act defines the types of proceedings to which the limitation periods set out therein apply. It reads, in relevant part, as follows: 3(1) Subject to subsections (2) to (5), this Act applies to claims pursued in court proceedings that: (

a) are commenced by statement of claim; or (

b) are commenced by originating notice and are not proceedings in the nature of an application. [ 30 ] As can be seen, The Limitations Act applies to only two types of “claims pursued in court proceedings”. These are proceedings that are “commenced by statement of claim” or proceedings that are “commenced by originating notice and are not proceedings in the nature of an application”. The terms “statement of claim” and “originating notice” are not defined in The Limitations Act .

However, both are documents used for the commencement of civil proceedings, as defined under Rule 17-1 of The Queen’s Bench Rules which states in relevant part as follows: 17-1 In these rules: … “commencement document” means: (

a) a statement of claim; (

b) an originating application; (

c) a counterclaim; (

d) a third party claim; or (

e) a document commencing a family law proceeding pursuant to

Part 15; and includes an amended commencement document; [ 31 ] Under Rule 3-2(2), a “statement of claim must be used to start an action, unless an enactment or these rules provide otherwise”. Rule 3-2(3) states that an “action may be started by originating application if these rules authorize the commencement of an action by originating application”. The contents of statements of claim are prescribed in Rule 3-9, which provides as follows: 3-9 A statement of claim must: (

a) be in Form 3-9; (

b) include the notice to defendant on the first page; (

c) state the names of the parties and their places of residence; (

d) state the claim and the basis for it; (

e) state any specific remedy sought; and (

f) comply with the rules about pleadings in Division 3 of

Part 13. [ 32 ] Rule 3-49(4) sets out similar requirements in relation to originating applications:

(4) An originating application must: (

a) be in Form 3-49; (

b) state the claim and the basis for it; (

c) state the remedy sought; and (

d) identify the affidavit or other evidence to be used in support of the originating application. [ 33 ] These Rules reinforce the notion that the terms “statement of claim” and “originating application” have a specific and well- understood meaning in the context of civil proceedings. I accept it as a given that this would have been known and understood by the Legislature when The Limitations Act was enacted. [ 34 ] In this case, the court proceedings that lead to the Decision were not commenced by either a statement of claim or an originating application. Indeed, Kramer Ltd. did not commence a proceeding at all.

It simply served the notice required by s. 48 of the SFSA . The service of this notice does not necessarily lead to court proceedings. To the contrary, if the farmer who receives a notice does not contest the repossession of the equipment, no court proceeding is triggered and the secured creditor can seize the equipment without further involvement of the courts (see, for example: Chmil v National Leasing Group Inc. , 2006 SKCA 140 at para 25 , 289 Sask R 144

[Chmil]). [35] I would add that the suggestion by the appellants that somehow The Limitations Act operates against Kramer Ltd. also ignoresthe fact that it was they who brought the matter to the Court, after having received Kramer Ltd.’s notice. They did so by requesting ahearing in accordance with s. 50 of the SFSA. The relevant portions of s. 50 read as follows: 50(1) Within 30 days after the date on which a notice is served on a farmer pursuant to

section 48, the farmer may apply for a hearing bythe court.

(2) A farmer who wishes to apply for hearing by the court shall: (

a) make his or her application in the form prescribed in the regulations; and (

b) deliver the form to the local registrar at the judicial centre that is: (

i) nearest to the place where the farmer resides; or (ii) if the farmer does not reside in Saskatchewan, nearest to the place where the secured party resides or carries on business. To section48, the farmer may apply for a hearing by the court. [36] As happened here, where a farmer files an application of this sort, s. 51 requires the local registrar of the judicial centre wherethe application is filed to immediately notify the secured party of that fact, and to fix a date for a hearing under s. 53.

By virtue of s. 52(2),the service of notice of a farmer’s application for a hearing on a secured creditor prohibits the creditor from taking any further proceedingsin relation to the equipment in question without leave of the court. Section 53(1) empowers a judge, in the hearing of an applicationpursuant to s. 50, to “make any orders that it considers just” with respect to the disposition of the equipment. [37] As can be plainly seen, nothing in

Part IV of the SFSA contemplates that any proceedings under that Part be commenced bystatement of claim or originating notice, nor have any such proceedings been commenced by any party to this appeal. [38] All of this leads me to conclude that The Limitations Act does not apply in the context of a hearing requested by a farmerpursuant to

Part IV of the SFSA. Notwithstanding the apparent clarity of the legislative text, the appellants contend that s. 3(1) of TheLimitations Act should not be interpreted in this way. Relying on Naber, they argue that the purpose of the SFSA is to “assist farmers toretain their farming operations in the face of financial instability”, by providing them with “protection against seizure of their land andequipment and … additional tools to enable them to work out accommodations with their creditors” (at para 22). While these statementsfrom Naber accurately describe the purpose of the SFSA, the appellants’ arguments seek to distort the nature of the procedures providedfor under

Part IV of the SFSA, and the authority of the Court to make orders under it. [39] More specifically, the SFSA was never intended to provide a forum for the resolution of legally or factually contentiousdisputes between farmers and secured creditors. In this regard, although, following a hearing requested by a farmer, a court may make abroad range of orders, including “any orders that it considers just” (s. 53(1)), this does not allow it to make rulings in connection with thesubstantive rights of the parties that depend on making findings of contested facts.

This was explained in Belarus Equipment of CanadaLtd. v Chernoff, (SK CA), [1983] 5 WWR 536 (Sask CA) [Chernoff]. That case was decided in context of TheLimitation of Civil Rights Act, RSS 1978, c L-16, upon which

Part IV of the SFSA is based. Both parties had encouraged the judge todetermine an issue relating to the performance of a farm implement. Justice Matheson (ad hoc), speaking for this Court, found that “thediscretion granted by the judge to make such orders as he deems just must be exercised within the framework of the failure by therespondents to make a payment under the agreement” (at para 16).

He gave as an example of the types of orders that can be made toextend the dates for payments due from the farmer to the secured creditor: [21] Orders relating to issues involving the temporary relief from forfeiture, or relief predicated upon the applicant's temporaryhardship or inability to pay, or upon some like need for forbearance from the opposite party's right to proceed, are orders within the scopeof the judge's discretion.

But orders based on issues that have nothing to do with the applicant's ability to make payments, which aredesigned to definitively resolve legal disputes between the parties that would ordinarily be tried in regularly constituted actions, are notwithin the ambit of the judge's discretion under this section. (Emphasis added) [40] Chernoff has been consistently followed in the context of the SFSA and the passage that I have just quoted was referred to inNaber as describing “the limits of a judge’s discretion” (at para 30).

Naber reiterates that the fundamental purpose of the SFSA is toprovide assistance to farmers in the face of the financial uncertainties of the agricultural industry: [22] The SFSA is farm debt legislation enacted for the benefit of farmers. Its full title suggests its object:

an Act to provide for securityfor Saskatchewan family farms. The purpose of the SFSA is to assist farmers to retain their farming operations in the face of financialinstability, generated by the vagaries of the farming industry such as weather, blight, transportation and market upheavals. It providesfarmers with protection against seizure of their land and equipment and provides additional tools to enable them to work outaccommodations with their creditors. (Emphasis added) [41] Writing for the Court in Naber, Ryan-Froslie J.A. made two more important points.

The first is that orders under s. 53 are notlimited to situations of temporary financial hardship, but encompass circumstances where there is a need for temporary forbearance fromthe creditor’s right to proceed. The second is that s. 53 does not give judges the power to resolve legal disputes between farmers and theircreditors outside of the specific context for which jurisdiction has been granted.

On that second point, she stated that s. 53(1) does notempower judges “to resolve legal disputes between farmers and their creditors that would ordinarily be subject to court proceedings suchas determining the meaning of contractual provisions, determining whether the contract had been breached or the amount owing under thecontract (other than a simple accounting exercise)” (at para 31).

[ 42 ] The authority given to the Court, pursuant to s. 53(4) , which is relied upon by the appellants, does not change this. That

section states as follows:

(4) Where a secured party and a farmer do not agree as to the amount remaining unpaid under the agreement, the court may determine the amount. This

section provides the court with jurisdiction to make what might be seen as a substantive determination. However, this is a limited authority — to determine what is owing “ under the agreement” (emphasis added). When read in context, the Legislature can be understood as saying that where there is this limited type of dispute, the court may determine what the contract between the parties provides for the purpose of putting into place an orderly payment structure or some other similar type of arrangement.

It is not the grant of authority to make other determinations of a broader type. [ 43 ] The appellants’ suggestion that their possible limitation defence is relevant ignores all of this. It amounts to an invitation to do what Chernoff and Naber say cannot be done, namely, to have the court adjudicate in the context of a limited-type of hearing under

Part IV of the SFSA on matters that are properly the subject of an action in the Court of King’s Bench, or other forum with jurisdiction over that dispute. [ 44 ] I would add that there are other contexts in which this Court has held that The Limitations Act does not apply to proceedings where the matter at issue involves the enforcement of an obligation or debt, if the proceedings are not commenced by statement of claim or originating notice. (See, for example, Hanson v Hanson , 2019 SKCA 102 , 32 RFL (8th) 257; and Charles v Saskatchewan Government Insurance , 2021 SKCA 11 , 456 DLR (4th) 132). [ 45 ] Further, I am not persuaded by the appellants’ arguments that draw analogies to other proceedings between debtors and creditors where limitation periods do apply.

For example, limitation periods apply to mortgage lenders when they seek to foreclose on real property (see, for example, Rack Petroleum Ltd. v Gidluck , 2013 SKCA 104 , 423 Sask R 247), but the difference in that context is obvious. Foreclosure proceedings must be commenced by a statement of claim and, of necessity, draw a court into a consideration of any other broadly relevant factual and legal issues that bear on the debtor-creditor relationship pertaining to the mortgage. Thus, a mortgage- enforcement action clearly falls within the purview of s. 3(1) of The Limitations Act .

That is not so with proceedings under

Part IV of the SFSA . [ 46 ] In conclusion, a notice served by a creditor under s. 48 of the SFSA does not, itself, commence a court proceeding or result in an adjudication. No statement of claim or originating notice is involved. Ergo, The Limitations Act does not apply. The Chambers judge answered the question of law raised by this ground of appeal correctly and, accordingly, it cannot succeed. [ 47 ] Having reached that conclusion, it is unnecessary to address the question of whether the Chambers judge erred by finding that Mr. Melnick had acknowledged the debt within the limitation period. B.

Did the Chambers judge err in law by ordering return of the equipment instead of determining a reasonable purchase price or holding a separate hearing for that purpose? [ 48 ] The appellants’ remaining argument is that, even if the Chambers judge did not err by finding that Kramer Ltd.’s ability to recover the equipment under

Part IV of the SFSA had not been extinguished by the expiry of a limitation period, he erred by ordering that the equipment be returned. The appellants say they had an equity of redemption in the equipment and that farmers are entitled to a reasonable redemption period before losing possession of their implements. As such, they assert that the Chambers judge was required, by s. 10(2) of The Sale of Goods Act and s. 53(4) of the SFSA , to determine a reasonable purchase price for the equipment and set a period within which they could redeem the security by paying that price.

The appellants contend that, by failing to determine a reasonable purchase price under one of those provisions or adjourn the matter and hold a specific hearing for that purpose, the Chambers judge erred in law. [ 49 ] For reasons that I will develop, this argument also fails. [ 50 ]

Section 53 of the SFSA sets out a judge’s remedial powers in a hearing held under s. 50 . The portions of that

section relevant to the present case read as follows: 53

(1) On the hearing of an application made pursuant to

section 50 , the court may make any orders that it considers just.

(2) Without limiting the generality of subsection (1), the court may: (

a) order delivery of the implement to the secured party, subject to any conditions that the court considers just; or (

b) order delivery of the implement to the secured party and postpone the operation of the order: (

i) on condition that the farmer pays to the secured party any amount that the court considers just; or (ii) subject to fulfillment of any conditions by the farmer, other than that described in subclause (i), that the court considers just. …

(4) Where a secured party and a farmer do not agree as to the amount remaining unpaid under the agreement, the court may determine the amount. [ 51 ] As is apparent, a judge’s decision as to what order is “just” under s. 53(1) involves an exercise of discretion. Appeals under s.

106 of the SFSA are limited to questions of law.

A discretionary decision will involve an error in law where the judge failed to correctlyidentify the legal criteria which governed the exercise of their discretion or misapplied those criteria, including where they have failed togive any or sufficient weight to a relevant consideration (Kot v Kot, 2021 SKCA 4 at para 20, 63 ETR (4th) 161; Herold v Wasserman,2022 SKCA 103 at para 24). [52] As I understand the appellants’ argument on this point, as it might be framed as a question of law, they are alleging that theChambers judge misapplied the criteria governing the exercise of his discretion, in that he failed to recognize the legal principle that noorder for a delivery of chattels should be made until an amount owing is determined.

Relying on Bank of Montreal v Hall (1988), (SK KB), 70 Sask R 245 (QB) at para 31, Stefaniuk v Canadian Imperial Bank of Commerce (1989), (SKKB), 77 Sask R 214 (QB), and Bank of Montreal v Harris (1985), (SK KB), 45 Sask R 246 (QB), the appellants arguethat by virtue of s. 10(2) of The Sale of Goods Act, and s. 53(4) of the SFSA, a judge has the power, in an application under s. 50, todetermine the amount owing under an agreement for sale, where that amount is in dispute. [53] The appellants’ argument here focuses on s. 53(4) which, as I have noted, allows a court to fix the amount owing under anagreement where there is a dispute between the secured creditor and a farmer.

The power that this provision gives must, like the rest of s.53, be read in the context of the purpose for which it is given. Its existence certainly does not mean that in every case the court must fixthe amount owing or set a redemption period. In that respect, s. 53(4) is permissive, not mandatory. It says “the court may determine theamount” remaining unpaid under an agreement where that amount is in dispute. It does not say “the court shall determine that amount”.

Inshort, the judge has a discretion as to whether to engage in that process. [54] The criteria that bear on the exercise of a judge’s discretion under s. 53 were discussed in Naber. In that case, Ryan-Froslie J.A.observed that the SFSA makes no explicit reference to the factors a judge should consider in determining what order is just under s. 53(1),and noted that the “applicable factors will vary depending on the circumstances of each case and must be weighed keeping in mind thepurpose of the SFSA” (at para 25). [55] In Naber, Ryan-Froslie J.A. also referred to, and quoted from the decision in Bartko.

In Bartko, Mills J. said that the exercise ofdiscretion under s. 53 requires a judge to compare the equities of the parties to the application. He enumerated a list of equitableconsiderations that normally bear on that comparison: [3] Equitable considerations that are normally examined include: (

a) the amount outstanding under the lease agreement; (

b) the amount of continuing payments required pursuant to the agreement; (

c) whether the lease agreement has expired; (

d) whether the lease agreement includes an option to purchase the equipment at a determinable price; (

e) the payment history of the farmer, including the date of and amount of the last payment made; (

f) the fair market value of the equipment; (

g) the time of year the application is made in relation to the nature of the equipment for which possession is sought (for example,equitable considerations are stronger in favour of a farmer who seeks to retain possession of a combine for the purpose of an immediateharvest as opposed to retaining possession after harvest is completed); (

h) the time of year for which sales of the farm equipment would normally be held; (

i) the prospects the farmer has for becoming current under the lease agreement; and/or (

j) factors outside of the control of the farmer that may have led to the default occurring (for example, serious personal injury or death of aprincipal member of the farming operation, or catastrophes impacting upon the profitability of the farm). [4] There are likely other considerations that will arise.

The point of the previous comment is to emphasize the wide type ofconsiderations the Court is entitled to view in coming to a just determination. [56] Returning to Naber, Ryan-Froslie J.A. noted that other important considerations under s. 53(1) include the type of contract inplay and the reasons why a farmer has not met their payments: [27] In Bartko, the Chambers judge was dealing with a lease of farm equipment where ongoing payments were required.

While I wouldadopt Mills J.’s comments, I would add that a key factor in determining what is “just”, is the type of contract in play – that is, whether it isa lease, a lease with a buy out provision, or a purchase by installment agreement.

Also of importance is whether ongoing payments arenecessary or whether the contract is at an end and only a single payment is required. [28] It is of note that the SFSA does not require a farmer’s inability to meet their payments result from temporary hardship, though thatmay be a factor in determining what is “just”. [57] When those principles are applied to the present case, there is no question that the Chambers judge correctly identified the testto be applied under s. 53(1) of the SFSA. In his self-instruction on the law, he cited the very portions of Naber and Bartko that I have justsummarized.

He then turned specifically to the factors enumerated in Bartko. In that context, he observed that: (

a) The amount owing on the equipment was in dispute, largely because of the vague “handshake deal” character of the purchasearrangement.

(

b) The rental agreements had expired nearly four years prior to the hearing, and nothing had been paid anything toward the purchase of the equipment, or for the use of it, since that time. (

c) The present value of the equipment was estimated by Kramer Ltd. to be $304,000 and by the appellants to be between $140,000 to $150,000. (

d) The appellants had presented little information about their financial situation and no firm plan for payment. (

e) Given the disputes about the purchase price and the present value of the equipment, and the history of no payments having been made for more than four years, it was unlikely that the appellants would become current on their payments. [ 58 ] All of this must also be understood in the context of the position taken by the appellants that “if the purchase price [of the equipment] is established to be much more than $150,000, then [Mr. Melnick] would decline to purchase and instead return the farm equipment after harvest is completed” ( Decision at para 30).

For this reason, the Chambers judge had observed earlier in the Decision that scheduling a hearing “to determine the amount remaining unpaid under the agreement would serve no real purpose other than to cause further delay” ( Decision at para 30). [ 59 ] After reviewing these matters, the Chambers judge also accounted for other potential considerations: [41] I … consider the lack of evidence supporting the application, including information about the applicants’ financial situation. There is no real plan for payment. Much of Mr. Melnick’s affidavit is irrelevant or doubtful.

For example, at paragraphs 3-9 of his 18- paragraph affidavit, he repeatedly disparages the state of repair of the farm equipment when he first acquired it under the rental agreements, describing it as “not operational and was basically worthless”, “old and barely functional”, “so old and damaged no lender would finance it for me at any price”, and “old and broken down inoperable equipment”. [42] I considered delaying any order until after harvest. Mr. Melnick in his affidavit at paragraph 10 says “… the Equipment is essential to this years ( sic ) harvest now that we are in July… ”.

But Kramer served notice of intent to take possession in January 2022 and February 2022 and the applicants filed their applications for hearing in January and March of 2022. So, the applicants have had plenty of time to make other arrangements for harvest if the farm equipment was ordered returned to Kramer. [43] Mr.

Melnick at paragraph 11 says: “The hardship we have gone through is real, it is temporary, and with this crop and grain prices as they are, I do expect to be in a much better position by the end of the year if I can get this crop off and sold as planned.” I cannot reconcile the claim of a temporary situation with the history of non-payment over almost five years. I conclude either that the situation was not temporary or that the applicants were unwilling to pay anything and content to take advantage of the situation.

I find the latter to be more likely. [44] Finally, although the applicants did not make a claim for exemption from seizure, I raised with the parties the possibility of staggering the timing for return of the farm equipment, as ordered by the Court of Appeal in Herrnbock v Input Capital Corp ., 2020 SKCA 120 .

Having regard to all of the circumstances, as reviewed above, I find that it is not just to delay return of the farm equipment to Kramer. [ 60 ] After accounting for all of these considerations, the Chambers judge captured the one overarching fact that compelled the result he ordered: [46] The simple fact is that the applicants obtained and have, without payment, made use of valuable farm equipment for almost five years.

I find that it is just that Kramer recover its depreciated property and that recovery not be further delayed. [ 61 ] While the Chambers judge did not seek to determine the price of the equipment or resolve any of the other contentious issues between the parties, it was unnecessary for him to do so, and it would have been inappropriate to do so on the facts before him.

I will expand briefly on these two related ideas. [ 62 ] It was unnecessary for the Chambers judge to enter into a consideration of any of the thorny issues in dispute, including as to what arrangement, if any, relating to the sale of the equipment had actually been agreed to, whether that arrangement gave rise to an enforceable contract and, if one existed, whether limitation periods were at play given his view that it did not affect the overall equities of the situation before him.

In considering all the circumstances, but most particularly the limited residual value of the equipment and the unwavering position taken by the appellants that they may never pay anything for it, and being mindful of the purpose for which

Part IV of the SFSA exists, the outcome of the application was an appropriate exercise of discretion. [ 63 ] In my view, it would have been inappropriate for the Chambers judge to have resolved the contentious issues raised by the appellants because they are the very sorts of legal disputes that Chernoff and Naber instruct judges not to resolve under s. 53(1) . Not only would a determination of these issues stretch the hearing under

Part IV beyond its intended purpose, but it would risk compromising the parties’ positions in the context of any future proceedings in which those matters were properly brought into dispute. In this regard, it was appropriate that the Chambers judge make no order that would in any way affect the appellants’ entitlement to pursue a claim against Kramer Ltd. should they wish to exercise the option to purchase they claim to have.

It was also appropriate that the Chambers judge did not make a finding that may impact any future claim that Kramer Ltd. might seek to advance for the use of its equipment, should it be inclined to pursue one. In short, I can see no legal error in the Chambers judge’s decision not to wade into those waters. [ 64 ] In the circumstances of this case, the reasons given in the Decision demonstrate that the Chambers judge correctly identified the legal criteria that governed the exercise of his discretion, and I see no reviewable error in the way he applied those criteria. C.

What order should be made regarding the money paid under the CA Chambers Fiat ?

[ 65 ] As set out above, in the CA Chambers Fiat , when Kramer Ltd.’s application to lift the stay of execution of the Decision pending appeal was dismissed, one of the conditions that McCreary J.A. placed on the continuation of the stay was that the appellants pay $80,000 into an interest-bearing account, to be held pending the determination of this appeal. She gave the following reasons for imposing that condition: Rule 15(1) is in place to ensure there is no prejudice to either party until the appeal is heard. Time is of the essence here and Mr.

Melnick ultimately benefits by continuing to use the equipment without any cost to him until the hearing of this appeal. In my view, the appropriate thing to do is to implement conditions on how the stay might be lifted. I think it's appropriate to have Mr. Melnick pay monies into court to address the prejudice to Kramer, and if he fails, the stay will be lifted.

The monies that I will order paid into court reflect, as reasonably as possible, the evidence provided to the court as to what the value of the depreciation of the 2 units of equipment in question is plus the estimate of the repair costs of the units, until the end of the harvest season. That value reflects the prejudice to Kramer, if ultimately they were able to take back the equipment, of not having the use of it to otherwise sell in the 2022 harvest season or thereafter. It is my view, based on the evidence, that a sum of $80,000.00 is the appropriate amount of money to be paid into court.

That is based on the Affidavits provided by Kramer about the range of $80,000.00 to $150,000.00 for what depreciation plus repair costs would be. I also take note of the original rental amounts which were about $78,000.00 for the two units for a season. [ 66 ] The appeal has now been determined in Kramer Ltd.’s favour. It seeks an order that the $80,000, plus accrued interest, be paid to it. The purpose of the funds being paid into court was to compensate Kramer Ltd. for any prejudice it would suffer if the appellants were permitted to retain possession of the equipment pending the determination of the appeal.

The appellants had the benefit of the use of the equipment for the 2022 harvest season. The evidence regarding what the resulting prejudice to Kramer Ltd. would be, in financial terms, is reflected in the CA Chambers Fiat. Taking all of that together, it is appropriate to make the order that Kramer Ltd. seeks. V.

CONCLUSION [ 67 ] For the foregoing reasons, I would dismiss the appeal. [ 68 ] In this Court, Kramer Ltd. requested an order requiring the appellants to voluntarily deliver the equipment to it and, if the appellants fail to do so, that all of the expenses of the seizure be ordered to be payable to Kramer Ltd. by the appellants as part of the costs of this appeal. I note that the Chambers judge made no such order regarding seizure expenses and Kramer Ltd. did not cross-appeal that aspect of the Decision .

I can see no basis upon which to grant this additional relief to Kramer Ltd. as an aspect of costs in this Court. As such, Kramer Ltd.’s request for costs of this nature is denied. [ 69 ] That said, Kramer Ltd. was successful on the appeal and, accordingly, it is entitled to one set of the costs of the appeal, calculated in the usual way. “Kalmakoff J.A.” Kalmakoff J.A. I concur. “Leurer J.A.” Leurer J.A. I concur. “Tholl J.A.” Tholl J.A.