MFI Ag Services Ltd. v. Donna Fern, 2023 SKCA 30

Court of Appeal for Saskatchewan Docket: CACV3925 Citation: MFI Ag Services Ltd. v Farm Credit Canada , 2023 SKCA 30 Date: 2023-03-06 Between: MFI Ag Services Ltd. and Donna Fern Nameth Appellants (Defendants) And Farm Credit Canada Respondent (Plaintiff) Before: Leurer, Tholl and Drennan JJ.A. Disposition: Appeal dismissed Written reasons by: The Honourable Mr. Justice Tholl In concurrence: The Honourable Mr.

Justice Leurer The Honourable Madam Justice Drennan On appeal from: QBG 2665 of 2015, Regina Appeal heard: January 10, 2023 Counsel: Deron Kuski, K.C., and Turner Ralston for the Appellant Rick Van Beselaere, K.C., for the Respondent Tholl J.A. I. INTRODUCTION [ 1 ] MFI Ag Services Ltd. and Donna Nameth [collectively the appellants] obtained loans from Farm Credit Canada [FCC], which were secured by mortgages. The appellants defaulted on those loans and FCC took steps to collect the debts, including serving notices of intention under s. 12(1) of The Saskatchewan Farm Security Act , SS 1988-89, c S-17.1 [ SFSA ].

Section 22(1) of the SFSA suspends the running of the limitation period under The Limitations Act , SS 2004, c L-16.1 , upon the service of such notices. It is common ground that the purpose for the giving of such notice is to allow farm debtors time to address their credit problems and to avoid the commencement of enforcement proceedings. [ 2 ] Some arrangements were made regarding the repayment of the debts, and, through the operation of s. 12(16) of the SFSA , the s. 12 notices expired after the passage of three years without a court application by FCC.

The appellants defaulted a second time, and FCC took further collection steps. The appellants argue that the failure of FCC to obtain an order under s. 11 of the SFSA before the s. 12 notices expired means that the limitation period was, in effect, never suspended. Based on this idea, they assert that the applicable limitation periods have passed, and, as a result, the debts are uncollectable and the mortgages are also unenforceable.

FCC contends that the service of the notices had suspended the running of the limitation periods for three years, with the limitation clock starting to run again at the point when the notices expired. [ 3 ] After considering the matter on a

summary judgment application, a Court of Queen’s Bench judge, sitting in Chambers, determined that the limitation periods had been suspended for three years as a result of the service of the s. 12 notices and the operation of the relevant sections of the SFSA . She further found that they had been subsequently extended, resulting in the loans being enforceable through an action on the mortgages. She also rectified the amount secured by one of the mortgages. The appellants assert that the Chambers judge erred in her

interpretation of the SFSA . They further argue that she erred by rectifying the mortgage. [ 4 ] The main issue in this appeal is whether, by allowing three years to pass after the giving of the s. 12 notices, FCC has lost the ability to rely on the suspension of the limitation period. For the reasons that follow, I conclude that they have not. The appeal is dismissed. II. BACKGROUND [ 5 ] The immediately relevant sections of the SFSA are as follows: Actions prohibited, continued or discontinued 9

(1) Notwithstanding any other Act or law or any agreement entered into before, on or after the coming into force of this Act: … (

d) subject to sections 11 to 21, no person shall commence an action with respect to farm land … . … No action without court order

(1) Where a mortgagee makes an application with respect to a mortgage on farm land, the court may, on any terms and conditions that it considers just and equitable: (

a) order that clause 9(1)(

d) or

section 10 does not apply … . … Notice to board and farmer 12

(1) Subject to subsection (14), a mortgagee may apply to the court for an order pursuant to

section 11 but only after the expiry of 150 days from the date of service of a notice of intention on: (

a) the board [the Farm Land Security Board]; and (

b) the farmer. …

(16) Where an application to the court pursuant to

section 11 has not been made within three years after the day on which a notice of intention pursuant to subsection (1) was served, whether the notice was served before or after the coming into force of this subsection, the notice of intention is deemed to have expired for the purposes of this section, and no further action may be taken by the mortgagee for an order pursuant to subsection (1) until a further notice pursuant to sub-section (1) is served. … Limitation of actions 22

(1) The period: (

a) commencing on the day on which a notice of intent is served pursuant to subsection 12(1); and (

b) ending on the day that an order is made pursuant to subsection 11(1) with respect to that application ordering that clause 9(1)(

d) or

section 10 does not apply or making an order for the purposes of clause 9(1)(f); is not to be included in calculating the time, pursuant to The Limitations Act or pursuant to any other law or rule of court, for commencing or continuing any action with respect to the mortgage or for commencing or continuing any action or making any application for the enforcement or recovery of any sum of money secured by a mortgage with respect to farm land. [ 6 ] The appellants are farm operators. Between 2004 and 2007, they obtained five loans from FCC, four of which were secured by three mortgages on farm land.

By December of 2009, all four of the loans secured by the mortgages were in default. [ 7 ] On March 16, 2010, FCC served notices of intention pursuant to s. 12(1) of the SFSA on the appellants. The notices informed the appellants that FCC intended to apply under s. 11 of the SFSA to the Court of Queen’s Bench for an order that s. 9(1) (

d) of the SFSA did not apply to the mortgages. Phrased in simpler terms, FCC gave notice that it intended to apply for a court order giving it permission to commence an action against the appellants on the mortgages. [ 8 ] Prompted by the giving of the s. 12 notices, the parties entered into discussions, which resulted in the appellants making five payments to FCC between February 22, 2012, and June 3, 2013, totalling $140,000. There were also numerous communications between the parties in which the appellants acknowledged the debts.

All these payments and communications took place more than two years after the appellants had defaulted on each loan. [ 9 ] FCC did not make an application under s. 11 of the SFSA prior to March 16, 2013. This resulted in the March 16, 2010, notices expiring through the operation of s. 12(16) of the SFSA . [ 10 ] On February 12, 2014, the appellants and FCC entered into a repayment agreement, which resulted in the appellants making additional payments on February 28, 2014, March 15, 2014, April 1, 2014, April 13, 2014, and November 18, 2014.

A further payment of $60,000 that, according to the repayment agreement, was due on November 30, 2014, was never made. [ 11 ] On February 18, 2015, FCC served new notices of intention on the appellants under s. 12(1) of the SFSA . Upon application by FCC under s. 11 of the SFSA , an order declaring that s. 9(1) (

d) of the SFSA did not apply was granted on December 18, 2015. FCC had a statement of claim issued on January 4, 2016. The claim sought payment of the four loans and foreclosure or judicial sale of the mortgaged lands. It further asked for rectification of the August 12, 2004, mortgage, alleging the parties had agreed that it was to be registered in the amount of $270,000, but it had erroneously been registered for $185,500. The appellants defended on the basis that the applicable two-year limitation periods under s. 5 of The Limitations Act had expired before the second set of notices were served.

They also resisted rectification. [ 12 ] The parties applied under Rule 7-1 of The Queen’s Bench Rules , seeking a

summary determination. A consent order issued, setting out the parameters of the application and the matter came before the Chambers judge for

summary judgment, pursuant to Rule 7-2 to Rule 7- 5 . III. COURT OF QUEEN’S BENCH DECISION [ 13 ] The Chambers judge described the relatively uncontroverted background, including the details of the loans, mortgages, defaults, notices, communications, payments, and court proceedings: Farm Credit Canada v MFI Ag Services Ltd. (21 October 2021)

Regina, QBG 2665 of 2015 (Sask) [ Chambers Decision ]. She determined that the matter was suitable for

summary determination and set out nine questions that she was required to answer (at para 16): 1. Did service of the notice under s. 12(1) of the SFSA suspend the limitation periods after March 16, 2010? If so, for what period of time? 2. Were the payments made between February 22, 2012, and June 12, 2013, acknowledgments of a claim for payment of debts that were owed to FCC pursuant to the four loans? 3. Were the emails sent by Joseph Melnick on March 4, August 13, November 5, and December 9, 2013, acknowledgements of a claim for payment of debts that were owed to FCC pursuant to the four loans? 4.

Had the limitation periods expired prior to February 12, 2014, the date upon which the defendants executed the repayment agreement? 5. Is the February 12, 2014 repayment agreement an acknowledgment of a claim for payment of debts owed to FCC pursuant to the four loans? 6. As part of the repayment agreement, did the parties agree to a revised due date for the payment of the amounts owing on the four loans? 7. Were the payments made between February 28, 2014, and November 18, 2014, acknowledgments of a claim for payment of debts owed to FCC pursuant to the four loans? 8.

Does [ The Limitations Act ] prevent FCC from pursuing its claim and enforcing its security? 9. Should the August 12, 2004, mortgage be rectified to secure the principal amount of $270,000.00? [ 14 ] The Chambers Decision analyzed each of these nine issues. Given the scope of this appeal, I find it necessary to describe only part of the Chambers judge’s findings. [ 15 ] It was, and remains, common ground that s. 5 of The Limitations Act imposed a two-year limitation period in relation to each of these loans and mortgages, subject to any suspension created by the provisions of the SFSA .

There was also no dispute that the limitation periods could be reset by acknowledgements and part payments as per s. 11 of The Limitations Act , but only if such acknowledgements or payments occurred before the applicable limitation periods expired. [ 16 ] Regarding the suspension of the limitation period under s. 22(1) of the SFSA following the service of the first notices on March 16, 2010, the Chambers judge noted that the matter turned on whether s. 22(1) had effect, given that FCC did not end up applying for an order under s. 11 .

She reproduced s. 12(16) and s. 22(1) of the SFSA , after earlier noting the relevance of s. 11 and s. 12(1) . The Chambers judge then set out a detailed description of the reasons in Roebuck Estate v Thiessen Bros. Farms Ltd. , 2014 SKQB 81 , [2014] 7 WWR 548 [ Roebuck ], where Scherman J. had addressed the

interpretation of s. 22(1). Relying on Roebuck , she found that the limitation period had been suspended for the three-year period from March 16, 2010, to March 16, 2013. Her primary reasoning was as follows ( Chambers Decision ): [45] Here, the defendants characterize the decision in Roebuck as problematic, arguing it allows creditors to serve a new notice of intention every three years without doing anything else, including participating in mediation. Rather, the limitations clock is stopped “forever”, which defeats the purpose of both the SFSA and [ The Limitations Act ].

The defendants also distinguish Roebuck from this case, arguing that while Scherman J. was required to determine whether the limitations clock resumed running after the notice expired, he was not required to determine whether the intervening three-year period should be excluded when calculating the applicable limitation period. [46] Respectfully, I do not agree with the defendants’ attempt to distinguish Roebuck . In that case, the notice of intention was served one day prior to the expiration of the limitation period. When the notice was served, the limitations clock stopped running.

When the notice expired, the clock resumed. The intervening three-year period was not included in the calculation. Rather, the Court held: 32 … Indeed, since the applicable limitation period would have expired on March 1, 2006, but for the filing of the respondent’s notice of intention, the respondent effectively extended his limitation period to March 1, 2009. … 34 It is my conclusion that the notice of extension having expired on February 28, 2009, the limitation clock began to run again.

Given the limitation period has substantially expired before the service of the initial notice of intention, once the clock began to run again it expired within the day. [47] I agree with and adopt the reasoning in Roebuck . In response to the defendants’ argument that to allow “serial” notices of intention is to undermine the SFSA and [ The Limitations Act ], I note that an exclusion order is not a foregone conclusion. Rather, pursuant to s. 19 of the SFSA : Grounds for dismissal 19 The court shall dismiss an application for an order pursuant to

section 11 if it is satisfied that it is not just and equitable according to the purpose and spirit of this Act to make the order. While every case will undoubtedly be determined on its merits, it is difficult to conceive how a serial refusal to participate in mediation will benefit a creditor who eventually seeks an exclusion order. [48] Accordingly, I am of the view that service of the notice of intention did suspend the running of the limitations clock for a period of three years, commencing March 16, 2010 and expiring March 16, 2013.

This had the effect of “moving the goalposts” … . [ 17 ] The Chambers judge then conducted a thorough analysis of the communications and payments made by the appellants,

describing in detail how each of those occurrences reset the limitation period for each loan. As a result of these part payments andacknowledgements, combined with her earlier determination that the limitation period had been suspended from March 16, 2010, toMarch 16, 2013, the Chambers judge found that when the second s. 12 notices of intention were served on February 18, 2015, theapplicable limitation periods had not expired. [18] Lastly, the Chambers judge addressed rectification.

She began by setting out the issue and describing the relevant documents.She then referred to Canada (Attorney General) v Fairmont Hotels Inc., 2016 SCC 56, [2016] 2 SCR 720 [Fairmont Hotels], forassistance in assessing whether the matter involved common mistake or unilateral mistake. After reviewing the oral evidence of JosephMelnick, a proper officer of MFI Ag Services Ltd., she determined that the mortgage should be rectified based on the following reasoning: [118] In Fairmont Hotels, the Supreme Court set out the prerequisites to rectification when faced with a common mistake: [14] ...

In such a case, an order for rectification is predicated upon the applicant showing that the parties had reached a prior agreementwhose terms are definite and ascertainable; that the agreement was still effective when the instrument was executed; that the instrumentfails to record accurately that prior agreement; and that, if rectified as proposed, the instrument would carry out the agreement: Ship M.F.Whalen v.

Pointe Anne Quarries Ltd. (1921), (SCC), 63 S.C.R. 109, at p. 126; McInnes, [The Canadian Law of UnjustEnrichment and Restitution (Markham, Ont.: LexisNexis, 2014)] at p. 820; Snell’s Equity [2015], at p. 424; Hanbury and Martin ModernEquity (20th ed. 2015), by J. Glister and J. Lee, at pp. 848–49; Hart v. Boutilier (1916), (SCC), 56 D.L.R. 620 (S.C.C.),at p. 622. [119] The defendants argue FCC has failed to discharge its burden of proof. They emphasize the Supreme Court’s characterization ofrectification as a “potent remedy”, which should be exercised with caution.

They also refer me to the Supreme Court’s commentsrespecting the quality of evidence required: [36] In my view, the applicable standard of proof to be applied to evidence adduced in support of a grant of rectification is that whichMcDougall [2008 SCC 53, [2008] 3 S.C.R. 41] identifies as the standard generally applicable to all civil cases: the balance of probabilities.But this merely addresses the standard, and not the quality of evidence by which that standard is to be discharged. As the Court also said inMcDougall (at para. 46), “evidence must always be sufficiently clear, convincing and cogent”.

A party seeking rectification faces adifficult task in meeting this standard, because the evidence must satisfy a court that the true substance of its unilateral intention oragreement with another party was not accurately recorded in the instrument to which it nonetheless subscribed.

A court will typicallyrequire evidence exhibiting a high degree of clarity, persuasiveness and cogency before substituting the terms of a written instrument withthose said to form the party’s true, if only orally expressed, intended course of action. [120] To the defendants, there is no evidence to explain the discrepancy between the terms of the Loan Approval and Acceptance and themortgage and no evidence from which to discern which document accurately reflects the parties’ intentions. With respect, I disagree.

Thisis not a case in which the terms of a written instrument are being altered to reflect the terms of an oral agreement. Rather, the parties’intentions are captured in a written agreement – the Loan Approval and Acceptance, the accuracy of which is corroborated by thesolicitors’ instructions which were, at least in part, reflected in the mortgage.

Accordingly, I am of the view the mortgage should berectified to secure the principal sum of $270,000.00. [19] In the result, the Chambers judge struck the statement of defence, gave permission for FCC to proceed with an order nisi forsale, and rectified the August 12, 2004, mortgage to secure the principal sum of $270,000. She also ordered costs, fixed in the amount of$2,200. IV. ISSUES [20] The issues in this appeal are as follows: (

a) Did the Chambers judge err in determining that the limitation period was suspended from March 16, 2010, to March 16, 2013,as a result of the operation of ss. 12(1), 12(16), and 22(1) of the SFSA? (

b) Did the Chambers judge err in rectifying the August 12, 2004, mortgage? V. ANALYSIS A. Suspension of the limitation period 1. Preliminary comments [21] Both parties are focused in their submissions to this Court. The appellants’ sole argument under this ground of appeal consistsof the assertion that the Chambers judge erred by finding that the limitation period had been suspended for three years as a result of theMarch 16, 2010, s. 12 notices of intention having been served. In their view, once the notices expired without FCC obtaining an orderunder s. 11 of the SFSA, the suspensions became non-existent.

They argue that this resulted in the limitation periods not being capable ofreset by part payment or acknowledgement of the debts because they had long passed by the time the payments and acknowledgementsoccurred. For its part, FCC agrees that if there was no suspension of the limitation period from March 16, 2010, to March 16, 2013, thenits action was time-barred because the limitation periods had passed before any of the part payments and acknowledgements had beenmade and the limitation periods could not have been reset by them: s. 11(2)(

b) of The Limitations Act. Based on all of this, the first issue inthis appeal focuses very narrowly on the proper

interpretation of s. 22 of the SFSA. [22] Three potential

interpretations of s. 22 have been proffered for what happens where a mortgagee serves a notice under s. 12(1)

but does not apply for an order under s. 11: (

a) service of the notice immediately suspends the limitation period, and, given that it only ends when an order is made unders. 11, and no such order was made, the limitation period is suspended indefinitely; (

b) service of the notice immediately suspends the running of the limitation period, but if no order is obtained before the noticeexpires three years later, the suspension is, in effect, deemed to have never occurred; or (

c) service of the notice immediately suspends the running of the limitation period, but if no order is obtained before the noticeexpires three years later, the suspension ends at the conclusion of the three years and the clock for the limitation period starts runningagain at that point. [23] The appellants put forward the second

interpretation, while FCC favours the third. None of the parties urged the first option onthe Court, with FCC categorizing that potential result as extreme. 2. Principles of statutory

interpretation [24] This ground of appeal raises an issue of statutory

interpretation, which is a question of law. It is, therefore, subject to thestandard of review of correctness: Altus Group Limited v Estevan (City), 2021 SKCA 101 at para 34, 23 MPLR (6th) 9. [25] The starting point in statutory

interpretation is an examination of the principles codified in s. 2-10 of The Legislation Act, SS2019, c L-10.2. This

section requires that the words of

an Act be “read in their entire context, and in their grammatical and ordinary sense,harmoniously with the scheme of the Act, the object of the Act and the intention of the Legislature” (s. 2-10(1)). Every enactment is to beconstrued as being remedial and is to be given “the fair, large and liberal

interpretation that best ensures the attainment of its objects” (s. 2-10(2)). [26] In Regina Bypass Design Builders v Supreme Steel LP, 2021 SKCA 82, Barrington-Foote and Kalmakoff JJ.A. described therequired analysis in a complete manner that bears quoting at length: [23] The proper approach to any issue of statutory

interpretation is the so called modern principle articulated in Rizzo & Rizzo Shoes Ltd.,(Re), (SCC), [1998] 1 SCR 27 [Rizzo Shoes], which “recognizes that statutory

interpretation cannot be founded on thewording of the legislation alone” (at para 21). … … [25] The language of the statutory provision in question is always the starting point, but not the end point, of an exercise in

interpretation.As noted in Hess v Thomas Estate, 2019 SKCA 26, 433 DLR (4th) 60 [Hess]: [50] The modern principle and s. 10 [now s. 2-10 of The Legislation Act] demand a contextual and purposive approach. However, thatdoes not mean the court can ignore the ordinary meaning of the words chosen by the legislature. As noted in Ruth Sullivan, Sullivan onthe Construction of Statutes, 6th ed, (Markham, Ont: LexisNexis, 2014) at 29 [Sullivan]: [I]nterpretation properly begins with the ordinary meaning — with reading words in their grammatical and ordinary sense — but does notstop there.

Interpreters are obliged to consider the total context of the words to be interpreted in every case, no matter how plain thosewords may seem upon initial reading. [51] The ordinary meaning prevails unless there is a reason to reject it based on contextual considerations. Such considerations – one ofwhich is the avoidance of absurdities – may result in the adoption of an

interpretation that differs from the ordinary meaning, but only ifthat

interpretation is plausible (Sullivan at 28–29). The plausible meaning rule requires that the

interpretation is one that the words of thetext can reasonably bear (Sullivan at 191). As LeBel J. said in Re: Sound v Motion Picture Theatre Associations of Canada, 2012 SCC 38,[2012] 2 SCR 376: “Although statutes may be interpreted purposively, the

interpretation must nevertheless be consistent with the wordschosen by Parliament” (at para 33). [26] In Ballantyne [2015 SKCA 38], Ryan-Froslie J.A., also citing Ruth Sullivan in Sullivan on the Construction of Statutes, 6th ed,(Markham, Ont: LexisNexis, 2014) [Sullivan], wrote: [20] … … 2. Even if the ordinary meaning is plain, courts must take into account the full range of relevant contextual considerations includingpurpose, related provisions in the same and other Acts, legislative drafting conventions, presumptions of legislative intent, absurdities tobe avoided and the like. 3. … the court may adopt an

interpretation that modifies or departs from the ordinary meaning, provided the

interpretation adopted isplausible and the reasons for adopting it are sufficient to justify the departure from ordinary meaning. [27] The modern principle emphasizes the importance of purposive analysis in statutory

interpretation. All legislation is presumed to havea purpose which courts should strive to discover and give effect to through the interpretive process. Legislative purpose must be taken intoaccount at every stage of the

interpretation exercise and, so far as the language of the text permits,

interpretations that are consistent withor promote legislative purpose should be adopted, while those that defeat or undermine legislative purpose should be avoided (Sullivan at§9.3; Farm Credit Canada v Gustafson, 2021 SKCA 38 at para 58). [28] Context must also be taken into account. As Sullivan observes, at §2.19, “in hard cases the contextual factors point in differentdirections” and “[i]n such cases, reading the text harmoniously with the scheme and object of the Act and the intention of the legislature

requires a balancing act”. All of this means that in some instances, the plain meaning of the words used will receive greater weight in theanalysis and, in other cases, less. As Sullivan describes, at §2.37: The factors that justify outcomes in statutory

interpretation are multiple, involving inferences about meaning and intention derived fromthe text, non-textual evidence of legislative intent, specialized knowledge, “common sense” and legal norms. These factors interact incomplex ways. It is never enough to say the words made me do it. [27] Looking strictly at the wording of s. 22, it directs that the period that commences on the happening of one event (the service ofa notice of intention under s. 12) and ends on the happening of another event (the granting of an order under s. 11) is not to be included inthe calculation of the applicable limitation period.

The SFSA is silent regarding this suspension of the limitation period in a case where thefirst event occurs but the second one does not. [28] Section 22(1)(

b) uses the language, “that application”, which is a reference to the notice of intention to make an applicationthat commenced the period under s. 22(1)(a). Based on the wording, it is not any order under s. 11 that halts the suspension period. It isthe order that is tied directly to the application made pursuant to the specific notice of intention served under s. 12. Looking only at theplain meaning of this wording, a subsequent s. 11 order obtained after the service of a second notice of intention could not be theoccurrence of the second event.

Yet, pursuant to s. 12(16), the notice of intention expires after three years, so if an order is not made inthat three years, it can never be made in relation to that notice of intention. Under that plain wording, there is a suspension period with abeginning, but with no way of creating an end once the three years has passed without an application. The appellants assert that this meansthe suspension period does not exist because it must have a beginning and an end to have any effect.

In their view, the suspension is anullity if the terminating event that bounds the period cannot ever occur. [29] Countervailing this asserted plain meaning is the fact that s. 12(16) of the SFSA deems the notice to have expired after threeyears. It does not deem the notice to have never existed. [30] The various provisions in

Part II of the SFSA operate in concert with each other to meet that Act’s overall objective. Todetermine the effect of the expiration of a notice of intention on the suspension of the limitation clock, the ordinary meaning of the wordsin ss. 9, 11, 12, and 22 must be collectively considered. [31] When used in reference to an official document, expire means “to be no longer legally effective; to become null at a time fixedbeforehand” (Black’s Law Dictionary, 11th ed sub verbo “expire”). Furthermore, the Oxford English Dictionary Online (OxfordUniversity Press, December 2022) sub verbo “expire”, provides the following

definitions: expire, v. 6. To come to an end: a. Of a period of time: To reach its close; to terminate, end: rarely, to elapse, pass. Sometimes conjugated with be. … b. Of a condition (in a bond or the like), a law, patent, truce, etc. appointed for a limited time: To become void through lapse of time; toreach its term; to determine. (Emphasis in original) [32] From these

definitions, it seems that the plain meaning of expire simply means that something that was once in effect has nowcome to an end. The expiration does not necessarily revoke the existence of the thing in question. Rather, it merely means that the effect ofthe thing, as it once was before the expiry, is no longer so. In the context of the present appeal, this leads to the conclusion that the expiryof the s. 12 notices of intention means that the notices of intention were no longer effective. The notices are not deemed to have neverexisted or to have had no effect.

If they existed, but are expired, then they still formed the commencement date for the suspension. If it iscommenced but the event that terminates it does not occur, then the wording of s. 22 could also support a temporary suspension or even anindefinite one. [33] A literal

interpretation of s. 12(16) and s. 22 does not dictate what must occur in the circumstances at hand. The competinginterpretations that arise when reading all the relevant sections, and the absence of an enactment that explicitly addresses the situation,reinforce the value of employing the purposive approach. 3. Purpose of the legislation [34] The purpose of the relevant part of the SFSA,

Part II: Farm Land Security, is set out in s. 4: “The purpose of this

Part is toafford protection to farmers against loss of their farm land”. However, as was noted by Jackson J.A. in Royal Bank of Canada v Lockhart(1996), (SK CA), 136 DLR (4th) 318 (Sask CA) at para 19, this statement from s. 4 does not fully capture theintricacies underlying

Part II. This protection is not absolute. It is not the purpose of the SFSA to thwart the enforcement efforts of lendersas against farmers who are in default of their obligations that are secured by mortgages on farm land. At some point, a lender must be ableto realize on the mortgage if the farmer is unable to pay the underlying debt that it secures. Were it otherwise, credit to farmers wouldgrind to a halt. Accordingly, a proper

interpretation of the SFSA involves some balancing of the interests of farmers with those of theircreditors. The SFSA ensures that enforcement involving foreclosure or judicial sale of farm land is done in a way that gives farmers anopportunity to work through the periodic hardships that often accompany the agriculture industry and to assist them in meeting theirfinancial obligations. It does this through the erection of safeguards and the establishment of a process that assists the parties to resolve theissues arising out of a default on a loan that is secured by a mortgage on farm land.

In order to grasp this complete overarching purpose ofthe SFSA, one must consider the history of the legislation, the relevant jurisprudence, and other sources that discuss this legislation. 4. History of the legislative scheme

[ 35 ] The SFSA is a piece of grassroots legislation that was meant to combat economic hardships experienced by Saskatchewan farmers. Through a series of legislative changes that occurred over several decades, the SFSA came to be in the form it is today.

The following recitation of legislative amendments to the law on mortgaging farm land in Saskatchewan details only those changes that are of importance to the present appeal. a. 1984 – imposition of a notice period [ 36 ] In the late months of 1984, while the Legislative Assembly of Saskatchewan was discussing the financial struggles then burdening Saskatchewan farmers, new proposed legislation respecting farm land security was gaining momentum. This proposed legislation was introduced in the form of Bill 1, An Act respecting the Security of Farm Land in Saskatchewan , 20th Leg, 4th Sess, 1984 [Bill 1].

Bill 1 would later become The Farm Land Security Act , SS 1984-85-86, c F-8.01 [ 1984 Act ]. This legislation imposed a 120-day notice of intention period on enforcement by a mortgagee (s. 9(4)). [ 37 ] Notably, the 1984 Act did not contain any provisions relating to a suspension of the limitation period or an expiration of the notice of intention.

While Bill 1 progressed through the Legislative Assembly, several members of the Assembly spoke about the importance of protecting the interests of Saskatchewan farmers (Saskatchewan, Legislative Assembly, Debates and Proceedings ( Hansard ), 20th Leg, 4th Sess (11 December 1984) at 402 (Mr. Hepworth, Minister of Agriculture)): To get to the Bill in a more detailed way, Mr. Speaker, I would say, first of all, that I view this as an historic piece of legislation but, more importantly, I view it as a reasonable, responsive, and responsible piece of legislation.

It shows compassion and understanding for the financial plight of today’s farmers. It will keep, as Mr. Davis said 50 years ago, it will keep Saskatchewan farmers where they belong: on this land. Keeping Saskatchewan farmers on the farms; that’s what this Bill is all about, and that’s what this Bill does. … Mr. Speaker, during the past several weeks, members of our government have talked with numerous groups and individuals about the cost–price squeeze.

Out of those discussions came one message loud and clear: the people of Saskatchewan want to ensure that farmers remain on their land and have the opportunity to work through their present financial difficulties. The Farm Land Security Act gives farmers that chance. It gives them that breather. It will give farmers the opportunity to plan for the future, safe in the knowledge that they are secure on their land. [ 38 ] Furthermore, Mr. Hepworth spoke about the intended impact of this legislation on creditors’ interests (at 403–404): Because what are the facts? The facts are this, Mr.

Speaker: that farming and agriculture has been very good to the financial institutions in this country. They are one of their best customers, paying in the last two years alone something in and around $400 million in interest payments. I would suggest to you, Mr. Speaker, that agriculture, farming, has been very good to the lending institutions. … And so I would just say to the lenders, and I refer specifically to a special edition of the Farm Business Review .

I would say, during this breather, get down to work with your farmer clients who just happen to be some of the best clients that they probably have ever enjoyed; get down to work and do as they’ve suggested in their policy options for continued support; get on with debt restructuring and consolidation; get on with deferment of interest and principal payments, capitalization of interest, interest rate concessions, partial liquidation of assets, loan set asides, and continued support of government guarantees. I say, get on with it. As well, Mr.

Speaker, I would suggest that it is in their best interests, as well, to see this Bill come to pass. Because what would be the effect of, for example, 10 or 11,000 farms being foreclosed on and having a massive sell off out there in Saskatchewan? I would suggest, Mr. Speaker, that their portfolio and the value of that equity would plummet dramatically.

And so I think it’s in the best interests of everyone to try and stabilize the situation and use this breathing room to, in fact, do that. [ 39 ] With respect to the specific provisions that dealt with the process by which a lender can seek a remedy when a farmer defaults on their mortgage, the following was said as an explanation (Mr. Hepworth at 405–406): There is further provision in the Act that prescribes a procedure whereby lenders, mortgagees, may apply to commence foreclosure in spite of the protection afforded by this Act. Such a provision was also contained in the family farm protection Bill, Mr.

Speaker. There are sections that provide that the court may order that a farmer not be afforded the protection of the Act by ordering that the previous sections 7 and 8 not apply. This could occur in situations where there is absolutely no possibility of the farmer meeting his mortgage obligations or where the farmer is not making a sincere and reasonable effort to meet his obligations with respect to his mortgage. There is provision, Mr. Speaker, for a procedure which a lender must follow if he wishes to have the court deny a farmer the protection offered by the Act.

He must give the farmer and the Farm Land Security Board 120 days notice of intention to apply to the court. No notice can be given until January 1, ′85. The Farm Land Security Board then investigates the financial affairs of the farmer and acts as a mediator between the farmer and the lender.

Before the case is heard by the courts, the Farm Land Security Board provides a report relevant to the lender’s application, with particular reference as to whether the board considers the farmer has a reasonable possibility of meeting his financial obligations under the mortgage, and as to whether the farmer is making a sincere and reasonable effort to meet these obligations.

The burden of proof is on the lender to demonstrate that the farmer has no reasonable possibility of meeting his obligations or that he is not making a sincere and reasonable effort. [ 40 ] From these passages, it would appear that the intention of Bill 1 was to keep farmers on their land to support the best interests of both farmers and creditors.

The requirement on lenders to provide 120 days’ notice before bringing an application to commence a court action was meant to give the farmer time to recover from their financial hardships and to encourage the issue to be dealt with through alternative measures other than court. This objective continued to be present in subsequent legislation.

b. 1988 – the suspension of the limitation period [ 41 ] The next major change in this legislative scheme that is relevant to the present appeal occurred through the introduction of Bill 37,

An Act to Provide for Security for Saskatchewan Family Farms , 2nd Sess, 21st Leg, Saskatchewan, 1988 [Bill 37]. Bill 37 eventually led to the enactment of the SFSA , which imposed a 150-day notice of intention requirement on mortgagees. As well, this version of the Act had a

section regarding limitation of actions by mortgagees. These provisions were set out as follows: Notice to board and farmer 12

(1) Subject to subsection (14), a mortgagee may apply to the court for an order pursuant to

section 11 but only after the expiry of 150 days from the date of service of a notice of intention on: (

a) the board; and (

b) the farmer. … 22

(1) The period: (

a) commencing on the date an application for an order is made pursuant to

section 11; and (

b) ending on the day that an order is made pursuant to subsection 11(1) with respect to that application ordering that clause 9(1)(

d) or

section 10 does not apply or making an order for the purposes of clause 9(1)(f); is not to be included in calculating the time, pursuant to The Limitation of Actions Act or pursuant to any other law or rule of court, for commencing or continuing any action with respect to the mortgage or for commencing or continuing any action or making any application for the enforcement or recovery of any sum of money secured by a mortgage with respect to farm land. [ 42 ] As Bill 37 advanced through the Legislative Assembly during the spring and summer of 1988, several comments were made that shed light on the economic environment in which this bill was introduced (Saskatchewan, Legislative Assembly, Debates and Proceedings ( Hansard ), 21st Leg, 2nd Sess (6 June 1988) at 1873–1875 (Mr.

Andrew, Minister of Justice and Attorney General)): Mr. Speaker, as anyone sets about to come to grips with the farm-debt question in this province, Mr. Speaker, you must look for a way to draw a proper balance, and that proper balance has to be in two forms, Mr. Speaker.

On the one hand you see farmers faced with severe debt problems, farmers being taken to court by the various financial institutions, farmers facing the risk of losing their land. … On the other hand, you talk to farmers and they say, yes, but if you go too far, as far as restricting foreclosures, you will have the effect of shutting off credit altogether to the agriculture sector, that is going to put further strain on the remaining farms.

It’s going to create a situation where it becomes difficult to borrow money to operate your farm or borrow money should you want to buy land or start a new farming operation … . … The central purpose of this Bill, Mr. Speaker, is to create at least the workings of a new system by which farm debt is dealt with, primarily between the bank and the farmer. And this, Mr. Speaker, is in the form of mediation.

This mediation we would hope, when it gets up and running, will be a forum by which the farmer and the banker can chose from a panel of well-trained, independent, Saskatchewan mediators … who will be selected from the panel, by both sides, as someone that they would see as fair. … With regard to the other details of the Bill, Mr. Speaker, before a lender can apply for permission to begin foreclosure on farm land in Saskatchewan, he will have to give 150 days notice to the Farm Land Security Board and to the farmer.

During that time there will be a 90-day period during which the financial analysis of the farmer’s affairs will be made by a representative of the board, and mediation will occur. Mediation will be conducted by a person who will have no connection to the board. They will be neutral as between the farmer and the lender, and will be given sufficient training to equip them to be first-class mediators.

We expect that mediation of this nature, there will be increased confidence among the farmers and the lenders that equitable arrangements are being negotiated to resolve that debt. [ 43 ] Looking at these comments, it appears that Bill 37 was intended to bring creditors and debtors dealing with farm land together to find a solution that worked in the favour of both sides. This objective was met by striking a balance between these competing interests (Mr. Andrew at 1876): This piece of legislation is designed to protect family farms. It brings people together to help them solve their problems.

It protects the home. It helps farmers understand their rights and obligations. It puts farmers and their families in a strong position to negotiate their future. It provides all the above without reducing the ability of the lender to advance credit, Mr. Speaker, and that’s the balance that we must find. [ 44 ] As is discussed below, such a purpose remained present in subsequent changes to this area of Saskatchewan law. c. 1992 – the three-year expiration [ 45 ] The next major change in the legislative scheme that is relevant to the present appeal occurred in 1992. With the introduction of Bill 57,

An Act to amend The Saskatchewan Farm Security Act , 2nd Sess, 22nd Leg, Saskatchewan, 1992 [Bill 57], the expiration of the

notice of intention after three years was introduced into s. 12(16) : from then on, s. 12(16) in the SFSA has remained in its current form. [ 46 ] As Bill 57 advanced through the Legislative Assembly, no members made mention of the purpose of having the notice of intention expire after three years. However, the purpose of the proposed amendment as a whole was expressed as follows ( Saskatchewan, Legislative Assembly, Debates and Proceedings ( Hansard ), 22nd Leg, 2nd Sess (16 July 1992) at 1527–1528 and 1528 (Mr. Wiens, Minister of Agriculture and Food)): Mr.

Speaker, this is grassroots legislation, and it is legislation which will help to preserve our Saskatchewan farming industry. It ensures that farmers may continue to farm land which they have turned over to lending institutions to settle debt — debt, Mr. Speaker, which is the result of international market conditions beyond our farmers’ control, debt that is incurred through no error or mismanagement on the farmers part. … If farmers have the time in which to recover, they will recover. And today, Mr. Speaker, the Government of Saskatchewan is proposing legislation to give them that time.

This legislation will help farmers to help themselves. This is one step in this government’s efforts to attack the farm crisis facing the Saskatchewan agricultural industry.

This is one step of several. . [ 47 ] Thus, while the debates and proceedings that occurred through this time period do not indicate the purpose of Bill 57 specifically in relation to the three-year expiration of the notice of intent, it can be inferred from this passage that the farmers’ interests were of significant importance in crafting this amendment. d. 2004 – update to the suspension of the limitation period [ 48 ] The final legislative amendment that is significant for the purposes of this appeal was introduced in the form of Bill 51,

An Act respecting Limitation Periods for the Commencement of Civil Proceedings, making consequential and related amendments to certain Acts and repealing certain other Acts , 1st Sess, 25th Leg, Saskatchewan, 2004 [Bill 51]. Bill 51 eventually led to the enactment of The Limitations Act . The Limitations Act slightly altered the wording of the provision that suspends the limitation period to its current form. There are no specific instances during the debates and proceedings in the Legislature surrounding Bill 51 that refer to the impact of this bill on the SFSA .

However, the general purpose of Bill 51 may be of relevance here (Saskatchewan, Legislative Assembly, Debates and Proceedings (Hansard), 25th Leg, 1st Sess (17 May 2004) at 1139 (Mr.

Quennell, Minister of Justice and Attorney General)): Our courts have recognized that statutes of limitations are created with four objectives in mind: to create a defined time as to when potential defendants may be free of ancient obligations; to prompt claimants to proceed before evidence is lost due to the passage of time; to encourage the plaintiff to act in a timely fashion; and to account for the claimant’s own circumstances when assessing whether a claim should be barred by the passage of time. Limitation of actions legislation attempts to balance the interests of the plaintiff with those of the defendant.

Society is interested in providing a fair and orderly process to obtain a remedy for injuries suffered by the claimant. The defendant, however, is interested in being able to mount a reasonable defence to any claim made. Limitation periods are intended to ensure that defendants have a fair opportunity to contest claims.

They are not intended to enable defendants to simply avoid liability. [ 49 ] Reading this passage in conjunction with the overarching purpose of the other legislative changes that have occurred to shape the SFSA into its current form, it appears that the clarification of the period during which the limitation clock is suspended is intended to allow creditors to be certain as to what point in time they must commence their action, while still providing for breathing room for indebted farmers. As illustrated below, this general legislative intent is visible in the jurisprudence and academic discussion as well. 5.

General jurisprudential and academic discussion [ 50 ] While the SFSA is intended to protect farmers, it does not dispose of creditors’ interests. Rather, it requires a balance between the two competing interests.

This concept is emphasized by Kalmakoff J., as he then was, in Canterbury Lofts Condominium Corporation v Dureau , 2016 SKQB 410 [ Dureau ]: [42] … The stringent notice and leave requirements in legislation such as [ The Land Contracts (Actions) Act ] and The Saskatchewan Farm Security Act , SS 1988-89, c S-17.1 [ SFSA ], and the incorporation of [ The Land Contracts (Actions) Act ] in the enforcement provisions of [ The Enforcement of Money Judgments Act ], along with the judicial oversight and discretion which they import, clearly demonstrate a legislative intention that foreclosure proceedings not be treated as “quick and dirty” exercises in Saskatchewan. [ 51 ] The focus of this legislative scheme is to create a process by which farmers and creditors can attempt to resolve their disputes relating to mortgages on farm lands before a creditor can seek foreclosure.

In Lemare Lake Logging Ltd. v 3L Cattle Company Ltd. , 2016 SKQB 230 , 38 CBR (6th) 80 [ Lemare ], Danyliuk J. stated as follows: [73] … While I appreciate that the overarching purpose of

Part II SFSA is to protect farmers against the loss of their farm land, I must also consider the “spirit” of the legislation. When

Part II is viewed in its entirety, the legislative scheme becomes clear. The spirit, as well as the express wording, calls for genuine cooperation and participation from both sides in the mandatory process which precedes a s. 11 application. Full and frank financial disclosure from the mortgagor is called for. Honest participation in negotiations through the mandatory mediation process is expected. The latter can seldom proceed in a meaningful way in the absence of the former.

In addition to the jurisprudence discussed thus far, Lemare illustrates how the parties in such a proceeding are expected to act in good faith in trying to reach a resolution. This is an essential aspect of the alternative dispute resolution process set out in the SFSA . As such, any

interpretation of the SFSA must have this requirement in mind.

[52] It also seems appropriate to draw upon a secondary source that speaks to this legislation. Donald H. Layh, A Legacy ofProtection: The Saskatchewan Farm Security Act: History, Commentary & Case Law, (Langenburg, Sask: Twin Valley Books, 2009),discussed the overarching purpose of the SFSA as follows (at 13): 1.3.1 Pre-Action Proceedings for Farm Land Saskatchewan has long protected mortgagors from a mortgagee’s hasty commencement of court proceedings under a defaulted mortgage.The Land Contracts (Actions) Act, R.S.S., 1978, c. L-3, has historically required mortgagees to seek leave of the court before commencingan action on a defaulted mortgage. …

Part II of the SFSA created new proceedings for actions under a mortgage or agreement for sale of farm land.

Part II mandates lengthyprocedures that mortgagees and vendors must follow before approaching the court seeking an order to effectively allow them tocommence an action on a defaulted mortgage or agreement for sale of farm land. This protection applies whether or not the mortgagor orpurchaser is a corporation, so long as the land subject to the mortgage or agreement for sale is “farm land”. All owners of farm land areentitled to the notices, mediation processes, and burdens of proof set out in

Part II before a mortgagee or vendor can seek an order thatallows it to commence an action seeking foreclosure, judicial sale or cancellation. [53] Additionally, Mr. Layh spoke to the intended effect of the expiration of a notice (at 79–80): 5.2.6 Expiry of Notice of Intention Often after serving the notice of intention, the mortgagor and the mortgagee negotiate terms of settlement and the mortgagee does not seekan order under

section 11. The farmer may have been able to reinstate the mortgage or the parties may agree to new terms of payment.After all, prompting the parties to reach a settlement is the basic intent of

Part II. What happens, though, if the new arrangements, wellintentioned as they may have been, are not kept? Does the mortgagee have to begin anew and re-serve the notice? By amendment of September 20, 1992, subsection 12(16) was added to the SFSA, S.S. 1992, c. 74. So long as the mortgagee brings anapplication under

section 11 within three years of serving the notice, the notice remains valid. Accordingly, mortgagees must serve thenotice of motion seeking an order under

section 11 setting a Chambers date no later than three years after serving the notice of intention.Subsection 12(16) does not clarify whether the three years begins from service of the original notice upon the mortgagor, the board, orboth. Minimally, one would believe, the application cannot exceed three years from service upon the mortgagor. Mortgagees must not think, though, that having served the notice of intention, the notice will unconditionally remain extant for threeyears. If, within the three years, the mortgagee seeks an application under

section 11 and the court dismisses the application under section20, the notice becomes functus. Nothing can revive it. The mortgagee is compelled to wait one year before serving a new notice: FarmCredit Corp. v. Dimmock (1989), (SK KB), 81 Sask. R. 45 (Q.B.) and Bank of Montreal v. Abbott and R&P GrainFarms Ltd. (1990), (SK KB), 81 Sask. R. 66 (Q.B.). Astute legal counsel for a mortgagee, detecting the inclination ofthe court to refuse to grant an order under a

section 11 application, is well advised to suggest a conciliatory order, agreeing to adjourn theapplication to a later date. A disposition shy of a complete dismissal does not invoke the finality of

section 20. Sometimes the mortgagee may have served the required notice and have successfully obtained an order under

section 11. Then, afterinitiating the action by way of statement of claim, the parties may negotiate a settlement of the claim. Where such a settlement runsamuck, the Court of Appeal has held that the mortgagee need not begin with a new notice under

section 12: “… it appears the legislaturethought one time through the complete process was to be enough”: Bart v. Phoenix Farms Ltd. (1995), (SK CA), 137Sask. R. 255 (C.A.) [at para 15]. Similarly, if after service of the notice of intention, the mortgagor reinstates the mortgage arrears but later allows the mortgage to againfall into arrears, the original notice of intention continues effective (so long as three years has not expired since service of the notice whichwould invoke subsection 12(16)): Farm Credit Corp. v. Madson (1999), (SK KB), 179 Sask. R. 318 (Q.B.). [54] While Mr.

Layh did not address the specific question that is raised in the present appeal, this passage illustrates how variousprovisions within

Part II of the SFSA work together. The suspension of the limitation clock is to allow for the alternative disputeresolution process to run its course. Often, this method of resolution is successful and a court application is no longer necessary. 6. Proper

interpretation of the impugned sections of the SFSA [55] With all the above as a background, the proper

interpretation of the provisions in question may now be undertaken. It is helpfulto this analysis to first encapsulate how the process works in practice. [56] Under the SFSA, a lender with a mortgage on farm land is prohibited from taking enforcement action against a farmer withoutfirst obtaining an order permitting it to do so. A precondition to obtaining this order is the service of a notice of intention, which imposes a150-day waiting period and triggers the involvement of the Farm Land Security Board [Board]. The Board reviews the financialcircumstances of the farmer and provides a report to the parties.

Thereafter, the lender, the farmer, and a mediator engaged by the Boardparticipate in a process to try to address the financial issues that are creating the problem between the lender and the farmer. At the expiryof a 105-day mediation period, the Board may take further steps. This process is set out in detail in s. 12(2) to s. 12(15) of the SFSA. [57] The parties agreed in argument that such discussions often carry on well past these timelines. The matter at hand is a case inpoint.

The initial notice of intention was served on March 16, 2010, and, thereafter, the parties actively engaged in lengthy discussionsover a period of several years. The appellants had been in default for approximately three months before the notice was served on March16, 2010, and their first payment was made more than two years after default. Had the limitation period not been suspended, it would haveexpired before this payment. An application under s. 11 would have been required by FCC long before the payment was made, creatingthe potential to derail the negotiations.

Instead, relying on the suspension created by s. 22, the parties were able to continue theirdiscussions.

[ 58 ]

Section 22 of the SFSA recognizes that a lender who is precluded from taking enforcement steps through the s. 12 process should not be prejudiced by the limitation period clock continuing to tick while the negotiations that the Act demands take place. I am satisfied, based upon my review of the history of the SFSA , that the Legislature determined that it would not be fair to prohibit a lender from realizing on its security while, at the same time, permitting the limitation period to march on.

Because the limitation period is suspended once the s. 12 notice of intention is served, the parties can continue to negotiate for an extended period of time to try to resolve the matter or to determine that it cannot be resolved. This purpose assists both parties. The lender does not have to worry about being prejudiced by a looming limitation period expiry date and the farmer can benefit from extra time to resolve the matter because the negotiations are not approaching a limitations-period brick wall. In my view, the appellants’

interpretation of s. 22 would undermine this facilitative purpose of the SFSA . [ 59 ] In Roebuck , Scherman J. interpreted s. 22 in a comparable set of circumstances. There, like here, a notice served under s. 12(1) expired after three years through the operation of s. 12(16) . Unlike the matter at hand, the limitation period in Roebuck had subsequently expired even if the three-year period of suspension was not included in the calculation of time. The creditor urged the Court to find that the service of the notice of intention suspended the limitation period indefinitely, whereas the debtor took the same position on

interpretation as FCC does in the current matter. Justice Scherman favoured the

interpretation urged on him by the debtor: [31] I am satisfied that the intention of the legislature was that a mortgagee, to whom the Farm Security Act applied, could suspend the limitation period clock running from and after servicing a notice of intention to enforce its security, provided that within three years of such service the mortgagee made an application to the court for an order under s. 11 permitting it to commence an enforcement action.

If the three years for making such an application expires without an application being made, then by operation of s. 12(16) the notice of intention is deemed to have expired and the limitation period begins running again. [ 60 ] The appellants point out that Roebuck is not binding on this Court nor is it clear that the issue was precisely the same as that here.

While they are correct in both statements, I find the following portions of Scherman J.’s reasons persuasive: [22] Sections 16(12), 18 and 19 make it clear that the objective of the Farm Security Act is that farmers not be subjected to foreclosure proceedings if they have a reasonable possibility of meeting their obligations under their mortgages and if they are making a sincere and reasonable effort to meet those obligations. [23] The Farm Security Act imposes on mortgagees of farm land the obligation to invest the time necessary to prepare and serve the notice of intention, to participate in the mediation process and to wait the mandatory 150 days before they can make application to the court for an order pursuant to s. 11(1).

Further, there is the potential that, when an application is made the court will refuse leave to take enforcement proceedings. [24] It would be a manifest injustice to mortgagees if their limitation periods to commence an action expired within the 150-day period before they could make an application or because the court, on the making of an application, refused an order permitting the commencement of an action. The reason the legislature provided a suspension of limitation time in s. 22 is obvious.

The legislative intent behind s. 22 was to ensure that mortgagees would have available to them the full limitation period they would otherwise have had but for the infringement on that time by the requirements of the Farm Security Act . [25] The overarching objective of the Farm Security Act is to prevent mortgagees from foreclosing on farmers who have a reasonable possibility of and who are making a sincere and reasonable effort to meet their obligations.

The mechanism created to accomplish this objective included a stopping of the limitation period clock, to the extent necessary to prevent the above-noted injustice to mortgagors. [ 61 ] I am satisfied that the purpose of s. 22 is to stop the applicable limitation periods from running once a notice of intention has been served so that the overall goal of

Part II of the SFSA of protecting farmers from the loss of their land can be achieved through the facilitation of discussions and resolution between a farmer and a lender without prejudicing the lender because of the passage of time. [ 62 ] Rather than encouraging consensual resolution of disputes between lenders and debtors, the appellants’ proposed

interpretation would tend to have several unsalutary effects and frustrate the overall purpose of the SFSA . For example, in some cases, their approach would compel lenders to apply under s. 11 for an order allowing them to commence an action, even where there were good reasons for them not to do so. If, as urged by the appellants, it were possible that the suspension period could be deemed to have never existed, lenders would be required to bring an application under s. 11 for permission to commence an action and then commence that action, even if negotiations had been fruitful.

They would be compelled to do so to preserve the limitations period that would have otherwise expired during negotiations in order to ensure that any settlement agreements were enforceable through an action on a mortgage. It makes little sense for a lender to be required to bring a needless application under s. 11 and launch a claim on a subject that has been resolved simply to invoke s. 22 and preserve a limitation period. That, in my view, would be an absurd result, and it is one that is not to be favoured unless it is compelled by clear statutory language. The desired endgame to the process set out in

Part II of the SFSA is to get the farmer back on track financially, not to facilitate s. 11 orders. An

interpretation that forces applications under s. 11 should be avoided. Litigation should be discouraged, not required. [ 63 ] It would also be incongruous for the Legislature to have set a two-year limitation period in s. 5 of The Limitations Act , in the face of a three-year suspension that would be deemed a nullity if a s. 11 order were not applied for and obtained under the SFSA . The Legislature cannot have intended to put such a contradiction into place. The

interpretation I have offered therefore avoids a conflict between the two pieces of legislation. As discussed in Lorenz v Talukdar , 2020 SKCA 28 , 446 DLR (4th) 487, when the

interpretation of a statutory provision involves the intersection of two different statutes, “while the two pieces of legislation may tug in different directions, for the purposes of applying the modern principle [of statutory

interpretation], there should be an attempt to determine if a common goal or goals of the corpus of legislation can be discerned” (at para 139). In this case, this common purpose is satisfied by recognizing that the service of a s. 12 notice immediately suspends the running of the limitation period, but, if no order is obtained before the notice expires three years later, the suspension ends at the conclusion of the three years and the clock for the limitation period starts running again. [ 64 ] Acknowledging the benefit of extra time for negotiations after a notice of intention has been served, and in support its

interpretation of s. 22, the appellants submit that a lender could simply obtain a payment, an acknowledgment of the debt, or a forbearance agreement, thus allowing negotiations to continue unimpeded by an impending expiry of a limitation period. This, of course, assumes that

the farmer has access to any funds to make a payment, would acknowledge the debt, or could be convinced to enter into a forbearance agreement during this confrontational process. The

interpretation urged by FCC obviates the need for the negotiation of this issue because the suspension is already part of the comprehensive scheme set out in

Part II of the SFSA . [ 65 ] The appellants also point to potential mischief that might occur if FCC’s

interpretation is accepted. They submit that an unscrupulous or vexatious creditor might simply serve a new s. 12 notice every three years, in perpetuity, refuse to participate in mediation, and take no further steps, thus tying up the security indefinitely. Of course, even under the appellants’

interpretation, such a creditor could simply serve one notice under s. 12, make an application under s. 11, adjourn the application sine die , and achieve the same result. However, both of these scenarios ignore the fact that this would be a commercially unreasonable path for a creditor to follow, and, in the unlikely event that it occurred, the farmer would have recourse to the Court of King’s Bench for a remedy: for example, see ss. 12(7) to 12(9) , 15 , 16 , and 19 of the SFSA .

The farmer would undoubtedly have other remedies through the Court of King’s Bench as well. [ 66 ] Lastly, I note that s. 12(16) provides for a lender to serve a further notice if the first notice has expired without an application being made under s. 11 . If the first notice expires, and the suspension is deemed to have not existed, there would be no sense in serving a further notice because – absent extension through acknowledgment, part payment, or a forbearance agreement – the limitation period would have expired, thus barring the claim. [ 67 ] Looking at the overall purpose of

Part II of the SFSA , and the role that s. 22 plays in helping to achieve its goals, I find that the

interpretation of s. 22 that best accords with that purpose is the one propounded by FCC. As submitted by FCC, the s. 12 notice of intention goes along the same path as the s. 22 suspension, and the notice and the suspension expire at the same time. The limitation period is suspended upon the service of the notice of intention. If an application in relation to that notice is not made under s. 11 prior to that notice expiring through the operation of s. 12(16) , the suspension of the limitation period ceases after three years and the limitation period clock starts running again on the day that the notice expires.

In other words, the three-year period is not included in the calculation of time when determining whether a limitation period has expired. This represents an

interpretation of s. 22 that its wording, when considered in the context of s. 12, can reasonably bear and best fits with the purpose of the SFSA . It is also a commercially reasonable result that benefits both lenders and farmers. [ 68 ] The Chambers judge’s

interpretation of s. 22 was correct. I cannot give effect to this ground of appeal. B. Rectification of the August 12, 2004, mortgage [ 69 ] As noted above, the Chambers judge rectified one of the mortgages by changing its amount from $185,500 to $270,000. The appellants submit she erred in doing so. [ 70 ] On August 12, 2004, the appellants signed a loan approval and acceptance document [Approval] for one of the five loans in issue in this matter.

The first page of the Approval contains, inter alia , the following: Farm Credit Canada (FCC) is pleased to advise that we have approved a Loan to You as follows: PURPOSE OF LOAN Payee Description Amount Maple Farm Equipment High 10 East Box 248 Yorkton, SK, S3N 2V7 Towards the purchase of JD 9750 S.P. Combine Promissory note – $40,000 – sent on July 16, 2004 by FCC $185,000 Farm Credit Canada Loan processing fee $500 Total Loan: $185,500 REPAYMENT TERMS – All Draws are collectively referred to as “the Loan”.

Loan Draw #1 Amount of Draw $185,500.00 … Terms of Draw 5 yr(s) … Product Open Variable Mortgage Rate … Interest Rate 4,7500 % … Amortization Period 10 yr(s) … Type of Payment Blended Payments of Interest + Principal Payment Frequency Annual … [ 71 ] The second page of the Approval contains, inter alia , the following: Notwithstanding the repayment terms outlined above, the Mortgage will be registered in the principal amount of $270,000 at an interest rate of 18%. The actual interest rate and payments applicable to the Draw(

s) of Your Loan, will be as indicated in this Loan Approval and

Acceptance until the Balance Due Date. Following the Balance Due Date, the Draw(

s) may be renewed and if renewed, the interest rateand payments will be as agreed to at that time. The principal amount of this Continuing Collateral Mortgage may be registered at an amount in excess of the loan(

s) now approved.Future loans under this mortgage may be solely at the discretion of FCC and may be subject to policies and procedures in place at thattime. [72] In its written instructions to the appellants’ solicitor, FCC stated the following: Please act on behalf of Farm Credit Canada (FCC) to prepare and register as necessary all loan and security documents in accordance withthese instructions and the attached Loan Approval and Acceptance/Loan Agreement. … FCC will not review any documents.

You are to assume sole responsibility for the accuracy and validity of documents and the preparationand registration thereof as required by law. … … SECURITY FOR THIS LOAN: REAL PROPERTY SECURITY Continuing Collateral Mortgage Register a Continuing Collateral Mortgage for the principal amount of $270,000 with an interest rate of 18% on the following parcelsincluding mineral rights, if applicable. [73] For unknown reasons, despite the instructions, the appellants’ solicitor prepared the mortgage in the amount of $185,500, and itwas registered in that amount [Mortgage].

At some point, FCC noticed this discrepancy and, as part of its claim against the appellants,sought rectification of the Mortgage to secure an amount of $270,000, as indicated on page 2 of the Approval. The Chambers judgegranted that relief. [74] The standard of review to be applied when examining a rectification decision varies with the issue. The identification of theapplicable principles is subject to review for correctness. Findings of fact, such as the intention of the parties and the terms of theagreement, are reviewed on the standard of palpable and overriding error.

A finding that the equitable remedy of rectification should begranted is a discretionary decision, subject to a deferential standard of review: see McLean v McLean, 2013 ONCA 788 at para 44, 370DLR (4th) 167, leave to appeal to SCC refused, ; Sattva Capital Corp. v Creston Moly Corp., 2014 SCC 53 at paras 42to 55, [2014] 2 SCR 633; and Kot v Kot, 2021 SKCA 4 at para 20, 63 ETR (4th) 161. [75] Rectification may be granted when a written instrument fails to correctly record the parties’ agreement.

The following excerptfrom the reasons of Binnie J. in Performance Industries Ltd. v Sylvan Lake Golf & Tennis Club Ltd., 2002 SCC 19, [2002] 1 SCR 678,nicely encapsulates the applicable general principles and the extent of this equitable remedy when a unilateral mistake is alleged: [31] Rectification is an equitable remedy whose purpose is to prevent a written document from being used as an engine of fraud ormisconduct “equivalent to fraud”.

The traditional rule was to permit rectification only for mutual mistake, but rectification is nowavailable for unilateral mistake (as here), provided certain demanding preconditions are met. Insofar as they are relevant to this appeal,these preconditions can be summarized as follows. Rectification is predicated on the existence of a prior oral contract whose terms aredefinite and ascertainable. The plaintiff must establish that the terms agreed to orally were not written down properly. The error may befraudulent, or it may be innocent.

What is essential is that at the time of execution of the written document the defendant knew or ought tohave known of the error and the plaintiff did not. Moreover, the attempt of the defendant to rely on the erroneous written document mustamount to “fraud or the equivalent of fraud”. The court’s task in a rectification case is corrective, not speculative. It is to restore the partiesto their original bargain, not to rectify a belatedly recognized error of judgment by one party or the other: [references omitted].

In Hart[(1916), (SCC), 56 DLR 620], at p. 630, Duff J. (as he then was) stressed that “[t]he power of rectification must be usedwith great caution”.

Apart from everything else, a relaxed approach to rectification as a substitute for due diligence at the time a documentis signed would undermine the confidence of the commercial world in written contracts. [76] When a common mistake is asserted, the limits and prerequisites for the remedy of rectification are those set out by Brown J. inCanada (Attorney General) v Fairmont Hotels, 2016 SCC 56, [2016] 2 SCR 720: [13] Because rectification allows courts to rewrite what the parties had originally intended to be the final expression of their agreement, itis “a potent remedy” (Snell’s Equity (33rd ed. 2015), by J.

McGhee, at pp. 417–18). It must, as this Court has repeatedly stated … be used“with great caution”, since a “relaxed approach to rectification as a substitute for due diligence at the time a document is signed wouldundermine the confidence of the commercial world in written contracts”: Performance Industries, at para. 31. It bears reiterating thatrectification is limited solely to cases where a written instrument has incorrectly recorded the parties’ antecedent agreement … .

It is notconcerned with mistakes merely in the making of that antecedent agreement … (“Courts of Equity do not rectify contracts; they may anddo rectify instruments”). In short, rectification is unavailable where the basis for seeking it is that one or both of the parties wish to amendnot the instrument recording their agreement, but the agreement itself.

More to the point of this appeal, and as this Court said inPerformance Industries (at para. 31), “[t]he court’s task in a rectification case is … to restore the parties to their original bargain, not torectify a belatedly recognized error of judgment by one party or the other”. [14] Beyond these general guides, the nature of the mistake must be accounted for: Swan and Adamski, [Canadian Contract Law] at§8.233. Two types of error may support a grant of rectification.

The first arises when both parties subscribe to an instrument under acommon mistake that it accurately records the terms of their antecedent agreement. In such a case, an order for rectification is predicatedupon the applicant showing that the parties had reached a prior agreement whose terms are definite and ascertainable; that the agreementwas still effective when the instrument was executed; that the instrument fails to record accurately that prior agreement; and that, ifrectified as proposed, the instrument would carry out the agreement: [references omitted].

(Emphasis in original) [ 77 ] In the matter at hand, the Chambers judge found that the problem arose out of a common mistake: the instrument – the Mortgage – failed to accurately reflect the prior agreement as written in the Approval. The appellants do not challenge this characterization of the nature of the mistake. [ 78 ] The appellants concede that the Chambers judge identified the correct legal principles in relation to rectification.

However, they allege that she erred in the application of those principles by failing to recognize that the test for rectification, and the invocation of such a potent remedy, was not met in relation to the Mortgage. The appellants argue that the evidence was insufficient to support the granting of rectification. They contend that the Approval itself contained inconsistencies that were ignored by the Chambers judge. They submit that the amount of the loan for $185,500 on page 1 of the Approval is inconsistent with the amount of the mortgage for $270,000 on page 2.

They also note that the interest rate is inconsistent between the two pages. The appellants further point out that the amount advanced was $185,500 and the Mortgage states $185,500. Lastly, they argue that FCC’s failure to tender evidence on the intentions of the parties – from any of its employees or any other persons who were directly involved in the loan or mortgage or the preparation of the associated documents – was ignored by the Chambers judge.

As they did in the court below, the appellants rely on the following excerpt from Fairmont Hotels regarding the quality of the evidence needed to support rectification: [36] In my view, the applicable standard of proof to be applied to evidence adduced in support of a grant of rectification is that which McDougall [2008 SCC 53] identifies as the standard generally applicable to all civil cases: the balance of probabilities. But this merely addresses the standard, and not the quality of evidence by which that standard is to be discharged.

As the Court also said in McDougall (at para. 46 ), “evidence must always be sufficiently clear, convincing and cogent”. A party seeking rectification faces a difficult task in meeting this standard, because the evidence must satisfy a court that the true substance of its unilateral intention or agreement with another party was not accurately recorded in the instrument to which it nonetheless subscribed.

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

Wyndham’s (Lingerie) Ltd. , [1981] 1 W.L.R. 505 (C.A.), at p. 521 : The standard of proof required in an action of rectification to establish the common intention of the parties is, in my view, the civil standard of balance of probability. But as the alleged common intention ex hypothesi contradicts the written instrument, convincing proof is required in order to counteract the cogent evidence of the parties’ intention displayed by the instrument itself. It is not,

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