Date: 20230509

Docket: A-154-21

Citation: 2023 FCA 95

CORAM:

RENNIE J.A. MONAGHAN J.A. ROUSSEL J.A.

 

BETWEEN:

HIS MAJESTY THE KING IN RIGHT OF CANADA

Appellant (Respondent by Cross-Appeal)

and

BEZAN CATTLE CORPORATION, BARBARA BEZAN and LATYON BEZAN

Respondents (Appellants by Cross-Appeal)

Heard by online video conference hosted by the Registry on November 16, 2022.

Judgment delivered at Ottawa, Ontario, on May 9, 2023.

REASONS FOR JUDGMENT BY:	MONAGHAN J.A.
CONCURRED IN BY:	RENNIE J.A. ROUSSEL J.A.

 

Date: 20230509

Docket: A-154-21

Citation: 2023 FCA 95

CORAM:

RENNIE J.A. MONAGHAN J.A. ROUSSEL J.A.

 

BETWEEN:

HIS MAJESTY THE KING IN RIGHT OF CANADA

Appellant (Respondent by Cross-Appeal)

and

BEZAN CATTLE CORPORATION, BARBARA BEZAN and LATYON BEZAN

Respondents (Appellants by Cross-Appeal)

REASONS FOR JUDGMENT

MONAGHAN J.A.

[1] The Attorney General of Canada on behalf of the federal Minister of Agriculture and Agri-Food (Minister) brought a motion for summary judgment against Bezan Cattle Corporation (Bezan Cattle) and its two shareholders, Barbara and Layton Bezan. The Federal Court (2021 FC 397 per Justice Little) granted summary judgment against Bezan Cattle but dismissed the action against the Bezans.

[2] The Attorney General appeals that decision and asks this Court to set aside the judgment dismissing the claim against the Bezans and to enter summary judgment against them. Bezan Cattle cross-appeals, asking this Court to set aside the summary judgment against it or, alternatively, to remit the matter to the Federal Court for trial.

[3] I would allow the appeal and dismiss the cross-appeal. Before explaining my reasons, a brief outline of the relevant background is warranted.

I. Background

A. The Federal Advance Payments Program

[4] The Agricultural Marketing Programs Act, S.C. 1997, c. 20, (AMPA) establishes and governs the Advance Payments Program (the Program) which supports agricultural producers. Under the Program, producers of agricultural product may apply for advance payments from certain administrators, including organizations involved in marketing the product. The advances are secured against the agricultural product and are repayable as set out in the repayment agreement between the producer and the administrator. The AMPA mandates certain terms in the agreements between the administrator and the producer.

[5] A corporation is eligible to receive an advance under the Program only if its shareholders agree in writing to be jointly and severally liable with the corporation to the administrator: AMPA, ss. 10(1)(d) and 22.

[6] If the producer defaults in its repayment obligations, the administrator may ask the Minister to repay any outstanding amount to the administrator and, provided certain conditions are met, the Minister must do so: AMPA, ss. 23(1). Once the Minister pays the administrator, the Minister is subrogated to the administrator’s rights against the producer and any person jointly and severally liable with the producer: AMPA, s. 23(2).

[7] As this Court has previously explained, “[t]he program facilitates access to credit for agricultural producers by transferring a substantial portion of the lending risk to the Minister” but the “Minister is nevertheless entitled to be made whole in the event of the producer’s default”: Moodie v. Canada, 2021 FCA 121 at paras. 5 and 6.

B. Advances at Issue

[8] In 2008, Bezan Cattle and Bezan Feeders Inc. (BFI), another corporation owned by the Bezans, applied for advances from Manitoba Livestock Cash Advance Inc. (MLCA) under the Program. Bezan Cattle applied for an emergency advance on April 9, 2008 and BFI applied for a continuous flow advance on April 29, 2008.

[9] In each case, the application consisted of several documents including an application form and a repayment agreement. As required by MLCA and the AMPA, the Bezans, as shareholders, signed a document labelled “Joint and Several Guarantee” under which they agreed “to be jointly and severally liable” for any amount owing by the applicant under the Program.

[10] Bezan Cattle’s application originally requested $45,938.88, but that amount was changed to $100,000. BFI’s application for approximately $200,000 was changed to indicate that Bezan Cattle, rather than BFI, was the applicant. The circumstances in which these changes were made, and who made them, are unclear. However, the Federal Court was satisfied MLCA sent the revised application forms to the Bezans: reasons at paras. 18 and 25. I will return to the relevance of these changes to the Federal Court’s decision later in these reasons.

[11] In their affidavits filed in response to the summary judgment application, the Bezans affirmed that they did not authorize any changes to the application forms for the advances. However, those affidavits did not contest that the money had been advanced, received and used, or that MLCA’s letters and the enclosed revised application forms had been received by the Bezans: reasons at paras. 18 and 25.

[12] MLCA deposited the $100,000 emergency advance (less certain fees deducted at source) in Bezan Cattle’s bank account and the $200,000 continuous flow advance (again less certain fees deducted at source) in BFI’s bank account, as requested in the applications. The emergency advance was repayable after 12 months and the continuous flow advance before September 30, 2009. The security for the advances included Bezan Cattle’s cattle.

[13] The Minister subsequently granted two stays of default to cattle and hog producers who had received advances under the 2008-2009 Program. The first was granted in 2009 and, on May 19, 2009, both Bezans executed a stay of default agreement on behalf of Bezan Cattle. Under this stay, no payments on account of the advances were required before October 15, 2010.

[14] By letter dated November 30, 2010, MLCA advised Bezan Cattle that the Minister had granted a second stay effective October 1, 2010 for an 18-month period. The letter identified $300,000 plus interest as owing by Bezan Cattle to MLCA. To qualify for the stay, MLCA’s letter asked that the Bezans read the enclosed acknowledgement of the stay, and that before December 31, 2010, one of them sign and return it with a $500 cheque. On December 20, 2010, Mr. Bezan signed the acknowledgement and returned it to MLCA with a $500 cheque drawn on Bezan Cattle’s bank account and signed by Ms. Bezan.

[15] The terms of the second stay required Bezan Cattle to negotiate an amended repayment agreement with MLCA before May 31, 2011 or to rollover part of the outstanding balance to the current production period. While Bezan Cattle sought to rollover a portion of the outstanding advance, it did not provide all of the required documentation. By letter dated November 1, 2011, MLCA asked Bezan Cattle to execute and return an enclosed settlement agreement under which the outstanding $300,000 advance plus interest would be repaid over a five-year period, with monthly payments commencing in August 2012. The Bezans signed the settlement agreement on behalf of Bezan Cattle and monthly payments were made until July 2013, but then stopped.

[16] On May 30, 2014, MLCA asked the Minister to repay the amounts owing to it and informed Bezan Cattle it had done so. MLCA received payment on August 13, 2014 and the Minister thereby became subrogated to MLCA’s claims against Bezan Cattle and the Bezans. Failing to obtain payment from them, on June 18, 2019, the Minister brought an action in the Federal Court to recover the amount owing and, approximately one year later, brought a motion for summary judgment.

II. The Motion before the Federal Court

A. Positions of the Parties

[17] Before the Federal Court, the Minister submitted that there was no genuine issue for trial and judgment should be granted against Bezan Cattle and the Bezans.

[18] Bezan Cattle and the Bezans argued both the summary judgment motion and the action against them should be dismissed, or alternatively, that the matter should be sent to trial.

[19] In the Bezans’ submission, the agreements in relation to the advances were void because MLCA made unilateral and material changes to them without their consent, including changing the amount of the emergency advance and changing the applicant from BFI to Bezan Cattle for the continuous flow advance. This, they asserted, was fraudulent. Alternatively, they submitted, the contracts should be considered void because they had been executed under duress and were unconscionable.

[20] The Minister contended that the Bezans had consented to the changes to the application forms and that, in any event, the agreements were valid and enforceable under the contract law doctrines of offer, acceptance and consideration. The Minister asserted that the application forms constituted offers and the modifications were counter-offers which Bezan Cattle and the Bezans accepted by their subsequent conduct.

[21] The Bezans also asserted, whatever the liability of Bezan Cattle, their obligations under the Joint and Several Guarantee were unenforceable under section 31 of The Saskatchewan Farm Security Act, S.S. 1988-89, c. S-17.1 (SFSA). Under section 31, a guarantee as there defined has no effect unless certain formalities are satisfied when it is executed. In particular, the individual must appear before a lawyer or notary public who must be satisfied that the individual is aware of the contents of the guarantee and understands it. If satisfied, the lawyer or notary must issue a certificate that must be attached to, or noted on, the guarantee. The Bezans asserted they had not sought or been given legal advice in connection with the Joint and Several Guarantee.

[22] Paragraph 31(1)(b) of the SFSA defines guarantee for this purpose as follows:

“guarantee” means a deed or written agreement whereby an individual enters into an obligation to answer for an act, default, omission or indebtedness of a farmer in relation to farm land or other assets used in farming, but does not include guarantees entered into prior to the coming into force of this Act.

[23] The Minister argued that section 31 did not apply because the Bezans’ obligation was not a guarantee, but an indemnity. That is, the Bezans–like Bezan Cattle–were primary obligors, not guarantors. Secondly, said the Minister, the default was not in relation to assets used in farming because the advances related to Bezan Cattle’s cattle which were not assets used in farming but rather products derived from using other assets.

B. The Federal Court Decision

[24] The Federal Court concluded that there was no genuine issue for trial. In its view, Bezan Cattle and the Bezans raised no credibility issues that would preclude summary judgment and the evidentiary issues they raised did not present any issue of fact or law that could not be determined with confidence on the record. The Federal Court was satisfied that it had the evidence necessary to adjudicate the dispute fairly and justly on the record.

[25] In doing so, the Federal Court recognized that it had to accept the Bezans’ evidence that they did not authorize the changes to the application forms. However, it found no inconsistency in accepting that evidence while concluding that the Bezans’ subsequent actions caused Bezan Cattle to accept legal responsibility for the two advances, such that Bezan Cattle was contractually responsible for repayment (citing Saint John Tug Boat Co. v. Irving Refining Ltd., [1964] S.C.R. 614, 46 D.L.R. (2d) 1 [Saint John Tug Boat]; Owners, Strata Plan LMS 3905 v. Crystal Square Parking Corp., 2020 SCC 29 [Strata Owners]; Ehler Marine & Industrial Service Co. v. M/V Pacific Yellowfin (Ship), 2015 FC 324; Blais v. Canada (Attorney General), 2004 FC 1638; and Trans Tec Services Inc. v. LYUBOV ORLOVA (The), 2001 FCT 958).

[26] In particular, the Federal Court found no evidence either party considered BFI as responsible for repaying the advances (reasons at paragraph 73) and that the Bezans took many positive steps to affirm that Bezan Cattle had the obligation to repay both advances, stating at paragraph 64:

In the present case, the evidence demonstrates much more than the acquiescence that gave rise to contractual obligations in Saint John Tug Boat. The Bezans took action themselves – positive steps – that affirmed that it was [Bezan Cattle’s] obligation to repay the total amounts owed to the plaintiff under the [two advances]. There is clear and unequivocal, repeated evidence over a long period of time demonstrating that both parties reasonably expected, and [Bezan Cattle] agreed in substance, that [Bezan Cattle] would be legally responsible to repay (as discussed further below). In addition, the defendants did not raise any issue as to the amount owing or whether [Bezan Cattle] was the correct borrower before the commencement of this proceeding, despite many opportunities to do so.

[27] The Federal Court highlighted the events that supported its conclusion and the absence of any contrary evidence: reasons at paras. 65-74. It rejected the assertion that the alterations constituted a fraud, there being no debate that the funds were advanced and no evidence that the alterations were made for the financial benefit of MLCA.

[28] The Federal Court then addressed the assertion that the contracts were void or unenforceable under the principles of duress or unconscionability. The Bezans pointed to the power imbalance in the negotiations, the alteration of the documents, and the wording in the agreements that, if outside section 31 of the SFSA, could put farmers into financial ruin. The Federal Court was not persuaded that the evidence supported a finding of economic duress or that the agreements should not be enforced due to unconscionability.

[29] Accordingly, the Federal Court concluded there was no genuine issue for trial with respect to Bezan Cattle’s liability and granted the motion for summary judgment against it.

[30] Turning to the action against the Bezans, the Federal Court said that to determine whether the Joint and Several Guarantee qualified as a guarantee for purposes of section 31 of the SFSA, three elements of the definition required analysis (reasons at paragraph 108):

(i) an obligation to answer for an act, default, omission or indebtedness,

(ii) the definition of “farmer”, and

(iii) whether the obligation arises in relation to “other assets used in farming”.

[31] Addressing the first element, the Minister submitted that notwithstanding the use of the word guarantee in the heading, the text of the Joint and Several Guarantee and the terms of the AMPA made the Bezans primary obligors, not guarantors. The Federal Court disagreed, concluding the Joint and Several Guarantee created obligations only after default, so that the first condition of the definition of guarantee was satisfied: reasons at paras. 109-113.

[32] The Federal Court viewed the second and third elements as “related” and thus considered them together. It first observed that, for purposes of section 31, a farmer is defined to mean a mortgagor. It then noted that mortgagor is defined “to include a purchaser under an agreement for the sale of farm land, a personal representative, successor or assignee of such a purchaser or a mortgagor, and a person claiming through such a purchaser or mortgagor”: reasons at para. 115, emphasis of the Federal Court. Although it observed that the three descriptions of a mortgagor relate to real property, it also noted that the definition is not exhaustive, such that farmer as used in section 31 could mean more than those three descriptions.

[33] The Federal Court then stated that Prairie Centre Credit Union Ltd. v. River Ridge Cattle Corp., 2010 SKQB 135 [Prairie Centre] had considered this issue and “concluded that ‘farmer’ in s. 31 does have an expansive meaning beyond real property and that ‘farming’ includes the raising of livestock”: reasons at para. 117. The Federal Court agreed with the reasoning in Prairie Centre and therefore concluded that, under section 31 “a ‘farmer’ is a form of mortgagor (not necessarily a real property mortgagor) who grants security over assets (other than real property) used in ‘farming’, a term that includes the raising of livestock”: reasons at para. 118.

[34] The Federal Court was satisfied that Bezan Cattle was engaged in raising cattle, the Bezans were principally occupied in the farming operation, and Bezan Cattle had granted MLCA a security interest over its cattle. On the basis of these conclusions, the Federal Court determined that the Joint and Several Guarantees executed by the Bezans were guarantees as defined in paragraph 31(1)(b) of the SFSA, and in the absence of any evidence that the formalities required by section 31 were met, were unenforceable against them. Accordingly, the Federal Court dismissed the action against the Bezans: reasons at paras. 119-120. It did not separately address whether Bezan Cattle’s cattle were assets used in farming.

III. The Appeal and Cross-Appeal

[35] The Attorney General appeals the decision to dismiss the action against the Bezans asserting that the Federal Court erred in concluding that section 31 of the SFSA applies to the Joint and Several Guarantee.

[36] Bezan Cattle cross-appeals the decision to grant summary judgment against it alleging the Federal Court erred in deciding there was no genuine issue for trial given the differences in the evidence regarding the changes to the applications for advances. Moreover, says Bezan Cattle, the Federal Court erred in holding Bezan Cattle liable for the funds applied for and advanced to BFI.

[37] While the appeal and cross-appeal arise out of the same factual background, and a successful cross-appeal would have implications for the appeal, in many ways the issues are entirely distinct. Because I would dismiss the cross-appeal, I have decided to address the appeal first.

[38] The appellate standard of review applies to the appeal and cross-appeal. Thus, questions of law are to be determined on the correctness standard, and questions of fact or mixed fact and law (excluding extricable questions of law) are to be determined on the standard of palpable and overriding error: Housen v. Nikolaisen, 2002 SCC 33.

[39] For ease of reference, the text of the statutory provisions I specifically refer to in these reasons is reproduced in an attached appendix. Because the SFSA has not been enacted in French, only the English text is authoritative and has been reproduced: see s. 2-18(1) of The Legislation Act, S.S. 2019, c. L‐10.2. Moreover, with the exception of the provisions from the AMPA, the appendix reflects the current version of the provisions. Although amendments were made to the other statutes after the Minister’s subrogation claim arose, none of the amendments are relevant to the appeal or cross-appeal.

IV. The Appeal

[40] The parties agree that the appeal turns on whether the Joint and Several Guarantee constitutes a guarantee as defined in section 31 of the SFSA.

[41] The Attorney General’s memorandum of fact and law and submissions at the hearing of the appeal focused on establishing that the Federal Court erred in concluding that section 31 applied because (i) the Bezans are primary obligors, not guarantors, and (ii) the advances made by MLCA were not in relation to assets used in farming. However, for reasons that will become apparent, it is unnecessary to address these arguments.

[42] Following the hearing of the appeal, this Court sought submissions from the parties on the proper interpretation of farmer as it is used in section 31. The Attorney General reviewed several provisions in the SFSA in support of its position that farmer in section 31 “must mean a party (whether it be an individual, a corporation, a partnership or other legal person) that has granted a mortgage of farm land.”

[43] The Bezans submitted that, for purposes of section 31, “a farmer should be defined as is [sic] an individual or corporation who pledges or gives security in relation to real or personal property used in farming”, essentially agreeing with the Federal Court and adopting the analysis in Prairie Centre.

[44] Prairie Centre was an application to the Saskatchewan Court of Queen’s Bench to determine three questions of law, including whether the defendant in that case was a farmer for purposes of section 31. The plaintiff in Prairie Centre argued that mortgagor means only a mortgagor of farm land. The Saskatchewan Court disagreed.

[45] In doing so, it observed that farmer is defined as mortgagor for purposes of section 31 and that the SFSA definition of mortgagor is not an exhaustive one. Thus, the Saskatchewan Court asked itself “what type of ‘mortgagor’? Is a mortgagor to mean only a mortgagor of farm land? Or can the word ‘mortgagor’ have a broader meaning?”: Prairie Centre at para. 11.

[46] After looking at the definition of mortgagor, and section 31 itself, that Court concluded that “a farmer is a form of a mortgagor (that can be different than a real property mortgagor) who grants security over other assets used in farming (again other than or [in] addition to farm land)”: Prairie Centre at para. 25. In the case before us, the Federal Court came to the same conclusion, adopting and agreeing with the analysis in Prairie Centre.

[47] In my view, the Federal Court erred in doing so. I have concluded that only a person who has granted a secured interest (mortgage) over farm land, or is otherwise specifically described in the definition of mortgagor in section 3 of the SFSA, qualifies as a mortgagor, and so a farmer for purposes of section 31 of the SFSA.

[48] Let me explain why I come to that conclusion.

A. Principles of Statutory Interpretation

[49] The words of a statute must be read in their entire context and ordinary sense harmoniously with the scheme of the legislation, its object, and the intention of the legislators: Canada Trustco Mortgage Co. v. Canada, 2005 SCC 54 at para. 10 [Canada Trustco]. Saskatchewan has codified this principle in section 2-10 of The Legislation Act.

[50] The relative effects of ordinary meaning, context and purpose in the interpretive process vary. When the words of a provision are precise and unequivocal, their ordinary meaning may play a dominant role. On the other hand, where the words are capable of supporting more than one reasonable meaning, the ordinary meaning of the words will play a lesser role: Canada Trustco at para. 10.

[51] As the Supreme Court recently stated in Canada (Minister of Citizenship and Immigration) v. Vavilov, 2019 SCC 65:

[117] A court interpreting a statutory provision does so by applying the “modern principle” of statutory interpretation, that is, that the words of a statute must 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 Parliament”: Rizzo & Rizzo Shoes Ltd. (Re), [1998] 1 S.C.R. 27, at para. 21, and Bell ExpressVu Limited Partnership v. Rex, 2002 SCC 42, [2002] 2 S.C.R. 559, at para. 26, both quoting E. Driedger, Construction of Statutes (2nd ed. 1983), at p. 87. Parliament and the provincial legislatures have also provided guidance by way of statutory rules that explicitly govern the interpretation of statutes and regulations: see, e.g., Interpretation Act, R.S.C. 1985, c. I-21.

[118] This Court has adopted the “modern principle” as the proper approach to statutory interpretation, because legislative intent can be understood only by reading the language chosen by the legislature in light of the purpose of the provision and the entire relevant context: [R. Sullivan, Sullivan on the Construction of Statutes (6th ed. 2014)], at pp. 7-8. Those who draft and enact statutes expect that questions about their meaning will be resolved by an analysis that has regard to the text, context and purpose, regardless of whether the entity tasked with interpreting the law is a court or an administrative decision maker.

[52] I now turn to applying these principles to determine the meaning of mortgagor as it is used in the SFSA. I focus on the proper interpretation of mortgagor because, for purposes of section 31, a farmer means a mortgagor: SFSA, s. 3(c).

B. Text: Ordinary Meaning

[53] Section 2 in Part I (Title and Interpretation) of the SFSA contains a number of definitions that apply for purposes of the SFSA as a whole. Mortgagor is defined in paragraph 2(1)(q).

[54] The Federal Court correctly observed that the SFSA “defines ‘mortgagor’ ... to include a purchaser under an agreement for the sale of farm land, a personal representative, successor or assignee of such a purchaser or a mortgagor, and a person claiming through such a purchaser or mortgagor” and that each of those descriptions of a mortgagor relates to real property. It then observed that the definition is not exhaustive and thus a farmer, as used in section 31, could mean more than the three specific descriptions in the definition: reasons at paras. 115-116.

[55] I have no disagreement with this analysis.

[56] However, neither the Federal Court nor the Court in Prairie Centre observed that the three specific inclusions only describe persons that fall outside the ordinary meaning of mortgagor (that is, a person who grants a mortgage). Moreover, neither considered the language of the definition beyond the use of the word “includes” and the three specific inclusions.

[57] Notably, the definition does not describe the ordinary meaning of mortgagor; the definition merely states “mortgagor includes” and then lists three specific inclusions. Thus, in the definition, “includes” operates to extend, but not displace, the ordinary meaning of mortgagor: R. v. A.D.H., 2013 SCC 28 at para. 28; and British Columbia Human Rights Tribunal v. Schrenk, 2017 SCC 62 at para. 36.

[58] However, the definition does not tell us which ordinary meaning applies. As both the Saskatchewan Court in Prairie Centre and the Federal Court observed, the ordinary meaning of “mortgagor” might support more than one interpretation—a mortgagor of land or the grantor of a chattel mortgage.

[59] The term “mortgagor” is thus imprecise and equivocal. In these circumstances, the text of the definition is both insufficient for, and unlikely to play a dominant role in, determining whether the legislators intended mortgagor to be interpreted as including a person who grants a chattel mortgage.

C. Context

[60] So what does the context tell us about the meaning of mortgagor?

[61] Context includes not only the surrounding language (i.e., the language of the specific provision) but also the broader context of the related provisions and the statute as a whole.

[62] Starting with the definition of mortgagor, as the Federal Court and Saskatchewan Court observed, the text of the specific inclusions suggests a focus on interests in land, but I agree that is not conclusive.

[63] Because the relevant context extends beyond the language of the specific provision, other related provisions and the SFSA as a whole also must be considered. Importantly, in my view, the SFSA expressly distinguishes between secured interests in land (mortgages) and in personal property in multiple ways. The terms mortgagor, mortgagee and mortgage play an important role in drawing that distinction.

[64] I start by examining related definitions and then examine how these definitions are used in the SFSA.

(i) Related Definitions: Mortgage and Mortgagee

[65] In ordinary parlance, a mortgagor grants a mortgage to a mortgagee. Not surprisingly then, section 2 of the SFSA also defines mortgage and mortgagee in paragraphs 2(1)(o) and (p), respectively. Reading the three definitions together, it is difficult to discern any intention that the term mortgagor include a chattel mortgagor.

[66] The definition of mortgagee is parallel to the definition of mortgagor. Like that definition, it makes no attempt to describe the ordinary meaning of mortgagee but rather states a “mortgagee includes” followed by a list of three specific inclusions. Those inclusions concern the same relationships as found in the definition of mortgagor, but viewed from the other perspective.

[67] Thus, mortgagee includes a vendor under an agreement for the sale of farm land, a personal representative, successor or assignee of such a vendor or a mortgagee, and a person claiming through such a vendor or mortgagee. As in the definition of mortgagor, “includes” operates to expand the ordinary meaning of mortgagee to persons who would be outside that ordinary meaning. (Except to the extent that the specific inclusions in the definitions of mortgagor and mortgagee form part of the context, they are not relevant to this appeal. Although I therefore may not specifically refer to them, persons described in the inclusions clearly are mortgagors and mortgagees, as applicable, for purposes of the SFSA.)

[68] In contrast, the definition of mortgage in paragraph 2(1)(o) is exhaustive: “‘mortgage’ means any mortgage of farm land, including...”; the definition then contains a list of specific inclusions in subparagraphs (i) to (iv).

[69] Although the definitions of mortgagor and mortgagee do not restrict their ordinary meaning, the ordinary meaning of mortgage is restricted to a mortgage of farm land, albeit supplemented by the specific inclusions in subparagraphs (i) to (iv). Consistent with the definitions of mortgagor and mortgagee, some specific inclusions are outside the ordinary meaning of mortgage (for example, an agreement for the sale of land in subparagraph (ii)), but none suggests an intention to include a chattel mortgage. All are capable of being read as restricted to mortgages or other agreements concerning land and nonetheless being fully operative.

[70] While the meanings to be attributed to mortgage, mortgagor, and mortgagee are sometimes modified for specific provisions in the SFSA, none of the modifications suggests a focus on anything other than farm land (see, for example, SFSA, ss. 21(7)(b), (c) and (d), 43(b)). Moreover, as discussed in paragraph 133 below, these terms are used exclusively in Part II and Part III of the SFSA, which are concerned only with secured interests in land and the rights of creditors and farmers with respect to those secured interests.

[71] In my view, because the definitions of mortgagor and mortgagee operate only to expand their meaning beyond the ordinary meaning in a specific and limited way, their intended ordinary meaning must be gleaned from their context and purpose. The definition of mortgage, and its focus on farm land, is particularly informative context. It suggests that a person qualifies as a mortgagor within the ordinary meaning only if that person has granted a mortgage on farm land.

[72] Subsection 2-27(1) of The Legislation Act states that if a word or expression is defined in an enactment, other parts of speech or grammatical forms of the same word or expression have corresponding meanings. While mortgagor and mortgagee are defined, their definitions do not indicate which ordinary meaning applies. In my view, given the definition of mortgage, the principle in subsection 2-27(1) supports adopting a corresponding meaning for the ordinary meaning of mortgagor—a person who has granted a mortgage on farm land.

(ii) Definitions Related to Security over Personal Property

[73] However, those three clearly related definitions are not the only ones of relevance. Other definitions in section 2, and in other Parts of the SFSA, further demonstrate a clear intention to distinguish between secured interests in real property (mortgages) and secured interests in personal property.

[74] The terms “purchase money security interest” defined in paragraph 2(1)(v), “secured party” defined in paragraph 2(1)(y), “security agreement” defined in paragraph 2(1)(z), and “security interest” defined in paragraph 2(1)(aa) are all exclusively concerned with personal property. All, like mortgage, are defined exhaustively.

[75] A security interest means an interest in personal property that secures payment or performance of an obligation. A purchase money security interest means a security interest of a vendor to secure payment of the sale price of personal property. A secured party means a person with a security interest. A security agreement means an agreement that creates or provides for a security interest.

[76] Under these definitions, a chattel mortgage is a security agreement that creates a security interest in favour of a secured party. However, a mortgage of land does not create a security interest and is not a security agreement; a mortgagee under a mortgage of land is not a secured party.

[77] As discussed in paragraphs 82 and 95 below, security interests in personal property are the subject of Part IV of the SFSA.

(iii) Definitions of Farmer: Distinction between Secured Interests in Land and in Personal Property

[78] Section 31 only applies if the default, act, omission or indebtedness is that of a farmer, which is defined for this purpose as a mortgagor. But that is not the only definition of farmer in the SFSA.

[79] Parts II, III, IV and V of the SFSA have their own definitions of farmer applicable in the Part (unless modified for a particular provision within the Part). Thus, farmer is defined eight times: see ss. 2(2), 3(c), 21(7)(b), 27.1(b), 39(1), 43(a), 45(a) and 65.

[80] Parts II and III of the SFSA each define farmer as a mortgagor: SFSA, ss. 3(c) and 43(a). As discussed in more detail below at paragraphs 91 to 94, these Parts are focused on real property, that is, farm land and the homestead, respectively. Consistent with that focus, the terms “mortgage”, “mortgagee” and “mortgagor” are used only in these two Parts of the SFSA.

[81] While by its terms the definition of farmer in paragraph 3(c)—a mortgagor—applies for purposes of Part II (including section 31), certain provisions in Part II modify that definition, albeit for limited purposes. In particular, paragraph 21(7)(b) and subsection 39(1) expand the definition to include an owner of farm land or a lessee, but again the focus is on interests in land. Paragraph 27.1(b) narrows the definition for limited purposes; to qualify as a farmer the person must be a mortgagor and satisfy certain other conditions. However, in all cases the focus remains on interests in land.

[82] In contrast, Part IV of the SFSA is concerned with security interests in personal property, and Part V is concerned with exemptions from seizure under secured obligations or judgment enforcement. For those purposes, farmer is defined without any reference to mortgagor, referring instead to a producer or agricultural corporation with payment or other obligations to be performed in connection with a secured obligation, as well as an execution debtor in the case of Part V: SFSA, ss. 45(a) and 65.

[83] Defining farmer as a mortgagor in those Parts of the SFSA that are concerned with real property, but using an entirely different definition in those Parts that are concerned with indebtedness incurred in respect of personal property or judgment enforcement, is further contextual support for the conclusion that mortgagor is intended to mean a person who has granted a mortgage on real property.

[84] Notably, for purposes of the definition of homestead in paragraph 2(1)(h), “‘farmer’ means ‘farmer’ as defined in Part II, III or V, as the case may be”: SFSA, s.2(2). A homestead is defined as the house and buildings occupied by a farmer as their bona fide residence and the farm land on which they are situated to a maximum area of approximately 160 acres. Homesteads benefit from special protections in Parts II, III and V of the SFSA.

[85] By virtue of Part II, where a mortgagee obtains an order of foreclosure on farm land that includes the homestead, the mortgage is apportioned by the court between the homestead and the farm land that is not a homestead, and the debt on the former is preserved: SFSA, s. 26. Part III stays the operation of a final order of foreclosure or order for possession that affects a homestead, for as long as the homestead continues to be a homestead: SFSA, s. 44. In these contexts, the security in question is a mortgage so that defining farmer as a mortgagor is appropriate.

[86] However, the focus of Part V is exempting farmers’ property, including a homestead, from seizure in connection with secured obligations or judgment enforcement. Thus, in determining whether a property is a homestead of a person for purposes of Part V, the definition of farmer in Part V is used, ensuring that a judgment creditor is precluded from seizing the homestead of a farmer (as there defined), notwithstanding that the farmer is not a mortgagor.

[87] But adapting the definition of farmer for purposes of determining whether a particular property is a homestead serves only one purpose, and does not change the meaning of farmer for purposes of Part II, III or V. This adaptation provides further contextual support for treating debt secured by a mortgage on farm land as entirely distinct from any other debt for which a farmer is responsible.

[88] Lyle Harvey Trimble (Re), 2017 SKQB 59 explains it this way at paragraphs 29-31:

[29] The general definition section in the SFSA refers to the term “farmer” with reference to the definition of “homestead”, stating in s. 2(2) that: “In clause 2(1)(h), “farmer” means “farmer” as defined in Part II, III or V, as the case may be”. Thus suggesting that the category of farmer who is eligible for homestead protection under each of the Parts depends on the Part-specific definition of the term “farmer”.

[30] The courts have interpreted the legislative intention behind each category of farmer-debtor protection with consideration for similar policy concerns, in most of the cases. Only a handful of the cases note that the breadth of protection will depend on the category of farmer defined in the applicable Part of the SFSA.

[31] Part II and Part III of the SFSA both provide protection for mortgagor-farmers, Part IV provides protection for farmer-debtors in reference to secured transactions and Part V provides protection for farmer-debtors in reference to secured transactions and for judgement-debtor-farmers. A brief reference to each of the different definitions may be of assistance to understand the distinctions between the categories of farmers.

[Emphasis added.]

[89] While section 31 has its own definition section, it does not define farmer, nor modify the definition of farmer in any way. It does not state that in applying it farmer means farmer as defined in this Part, Part III or Part IV, as the case may be, as subsection 2(2) of the SFSA does for the purposes of homestead. It seems clear that had the legislators intended farmer to mean something other than mortgagor in section 31, they would have said so—as they have done elsewhere in the SFSA, including in three other provisions in Part II. Because they did not, the relevant definition of farmer must be that in section 3—“a mortgagor”.

(iv) Architecture of the SFSA: Distinction between Secured Interests in Land and Personal Property

[90] The architecture of the SFSA is entirely consistent with the distinction between security over real property (mortgages granted by mortgagors to mortgagees) and over personal property (security interests, including personal property security interests, granted to secured parties) that the definitions suggest. The rights and obligations of farmers and creditors with respect to these two categories of security are addressed in entirely separate parts of the SFSA.

[91] Part II of the SFSA is titled “Farm Land Security”. Consistent with that title, its stated purpose is “to afford protection to farmers against loss of their farm land”: SFSA, s. 4. Put another way, because for purposes of Part II a farmer is defined as a mortgagor, the purpose of Part II is to protect mortgagors against the loss of their farm land. Not surprisingly, given that purpose, the focus of the provisions in Part II is exactly that.

[92] Action is defined as an action in court with respect to farm land by a mortgagee, or for purposes of section 25, an action with respect to farm land or a mortgage: SFSA, ss. 3(a) and 25(1). A mortgagee can commence an action seeking foreclosure or recovery of money owing under the mortgage only after it applies to the Saskatchewan Court of King’s Bench for an order permitting it do so: SFSA, ss. 9 and 11. It can apply only 150 days after serving notice of its intention to do so on both the farmer and the Farm Land Security Board: SFSA, s. 12(1). Mediation is a precondition to that application, and the farmer, the mortgagee and the Board have obligations in connection with the mediation: SFSA, s. 12. In some circumstances, a farmer may obtain a court order for supervised mediation: SFSA, s. 15.

[93] The farmer (mortgagor) benefits from certain presumptions regarding ability to repay, with the mortgagee bearing certain burdens of proof: SFSA, ss. 13 and 18. Farmers (that is, mortgagors) have a right of first refusal to purchase farm land lost to a creditor under foreclosure or quitclaim: SFSA, ss. 27(1) and (2).

[94] Part III of the SFSA is titled “Home Quarter Protection” and it, together with provisions in Part II, provide special protections for the homestead, as discussed above at paragraphs 84 and 85. Notably, a homestead does not include any personal property.

[95] Part IV of the SFSA is titled “Possession of Equipment” and addresses rights of farmers and limitations on the rights of persons with security interests (including purchase money security interests) in personal property under security agreements. It contains provisions dealing with repossession or surrender of “articles” and “implements”, restricted to personal property acquired or used by a farmer for use in farming: SFSA, ss. 46(1) and 2(1)(i). These restrictions apply to a secured party including a vendor under a purchase money security interest.

[96] Part V, titled “Exemptions”, exempts property of a farmer from seizure. As noted above, for this purpose, farmer is defined as a producer who owes payment or other performance of the obligation secured whether or not they own or have rights in the goods or who is an execution debtor: SFSA, s. 65. The term “execution debtor” typically refers to a person required to pay money pursuant to a judgment of a court.

[97] Thus, Part V is concerned with claims for payment under secured obligations in relation to goods or judgments for payment of money, not judgments of foreclosure, quitclaim, or possession of real property—all dealt with in Part II.

[98] The exemptions from seizure in Part V relate primarily to personal property, including clothing, jewelry, household furnishings, utensils, equipment and appliances, livestock, farm machinery and equipment, tools, seed grain and crops or produce, all within certain limits: SFSA, s. 66. However, a homestead, and certain rights the farmer has with respect to real estate, are also exempt, because, absent an exemption, they presumably could be seized under judgment enforcement: SFSA, s. 66(h), (k), (l), (m) and (n).

[99] With the exception of the definition of creditor in section 31 discussed below at paragraphs 110 to 118, the only provision of the SFSA that expressly deals with both mortgages and security agreements is section 41. It deals with application of payments made by a farmer where a mortgage (or security agreement) secures more than one debt. However, it too recognizes the distinction between secured interests in real property (mortgages) and secured interests in personal property (security interests including purchase money security interests).

[100] It is evident that the focus of Parts II and III of the SFSA is obligations secured by real property (that is, mortgages), the focus of Part IV is obligations secured by personal property, and the purpose of Part V is protecting certain assets of the farmer from seizure to satisfy secured obligations for goods or under judgment enforcement. The terms used in these Parts, including the definitions of farmer that differ as appropriate to the context, are entirely consistent with maintaining a distinction between secured interests in real property (mortgages) and other security interests and payment obligations.

[101] This distinction has been recognized by the Court of Appeal for Saskatchewan in Dietz v. Bank of Montreal, 107 W.A.C. 263, 1996 CanLII 4903 (Sask. C.A.), where it stated at paragraph 9:

...The debt as restructured clearly maintains the distinction between the chattel mortgages and the equitable land mortgages. Indeed, the [SFSA] specifically separates these two kinds of security by providing a process for enforcement of the land mortgage in Part II and for enforcement of a chattel mortgage under Part IV. There is no suggestion that where one is collateral to another both must be subject to the prerequisites to enforcement. To read such a provision into the Act would be to significantly amend the legislation...

[Emphasis added.]

See also Kovlaske v. Canadian Imperial Bank of Commerce, 2002 SKQB 434 at para. 19.

(v) Context and Prairie Centre

[102] In determining the meaning of mortgagor, the Court in Prairie Centre did not consider how the context, other than section 31, informed the interpretation to be given to farmer or mortgagor. Rather than look at the overall context, the Saskatchewan Court said that section 31 “itself best answers the question of how broad or narrow the definition of mortgagor should be”: Prairie Centre at para. 17.

[103] With respect, I cannot agree.

[104] The starting point in the interpretation analysis is the definition of mortgagor itself; it expressly applies for all purposes of the SFSA. Absent an express statement that the section 2 definition does not apply or should be modified, or context that clearly implies it is not intended to apply for some particular purpose, the same meaning should be attributed to the word throughout the statute: MiningWatch Canada v. Canada (Fisheries and Oceans), 2010 SCC 2 at para. 29. See also subsection 2-27(2) of The Legislation Act.

[105] Moreover, while used more than 50 times in the SFSA, the word mortgagor is not used in section 31. Yet, in assessing the meaning of mortgagor, the Saskatchewan Court restricted its contextual analysis almost entirely to section 31. In my view, this was an error; its contextual analysis was incomplete.

[106] The Saskatchewan Court relied on three observations to support its conclusion that mortgagor in section 31 included a chattel mortgagor.

[107] First, notwithstanding that section 31 is in Part II, the Saskatchewan Court expressed the view that it “is really a stand alone section” and that “[i]t would have been more convenient ...if the section pertaining to guarantees was put under its own autonomous part of the Act”: Prairie Centre at paras. 12 and 18. But, section 31 was not put in its own Part; nor was it included in either of the two Parts of the SFSA that contain provisions of general application, Parts I (Title and Interpretation) and VII (General Provisions). Rather, it is found in the Part of the SFSA titled “Farm Land Security” with a stated purpose of protecting against loss of farm land: SFSA, s. 4. Notably, the Saskatchewan Court did not mention section 4 or consider its implications for the interpretation of section 31.

[108] Secondly, the Saskatchewan Court noted section 31 contains its own definition section, and includes a definition of creditor: “creditor includes a mortgagee and a secured party”: SFSA s. 31(1)(a). Finally, it observed that the definition of guarantee in section 31 refers to “indebtedness of a farmer in relation to farm land or other assets used in farming”.

[109] I will address my reasons for disagreement with the Saskatchewan Court on the significance of these latter two observations in more detail.

(a) Definition of Creditor

[110] After citing the definition of creditor in section 31, the Saskatchewan Court in Prairie Centre stated at paragraph 20:

Therefore ...the drafters appear to have purposely expanded creditor to include more than a mortgagee. A secured party is added. Logically if a creditor is meant to be more than a mortgagee and includes a secured party then conversely a debtor must include not only a mortgagor in the real property sense but also the grantor or a debtor arising out of a security agreement.

[111] I agree that a creditor includes more than a mortgagee but I disagree with the conclusion that the Saskatchewan Court draws from that definition.

[112] First, notwithstanding that it has its own definition section, section 31 does not define or use the term debtor. Indeed, the term debtor is not used anywhere in the SFSA except in two headings in Part V, and in each case the text of the provision refers to a farmer, not a debtor: SFSA, ss. 71 and 73.

[113] Second, creditor is not used in the definition of guarantee, the only place in section 31 where farmer appears.

[114] The Saskatchewan Court continued:

[21] The word creditor is found again in s. 31 under s. 31(6)(b):

31(6)(b) accepted in good faith by the creditor;

[Emphasis added]

[22] Accordingly I have to ask myself why would the drafters include the definition of creditor (i.e. a secured party) and the use of the word again in s. 31(1)(6)(b) if they had not intended s. 31 to apply to more than farm land mortgage situations? It appears apparent on the wording of the section that the requirement for independent advice was intended in the situation of granting of security (such as the case here) beyond land mortgages.

The emphasis in this passage is that of the Saskatchewan Court.

[115] The Saskatchewan Court looked at only one use of the term creditor in section 31—in paragraph 31(6)(b). That provision imposes a condition that must be satisfied before the certificate issued by the lawyer or notary public is admissible as conclusive proof of compliance with the formalities of section 31 with respect to a guarantee.

[116] But, creditor is found in two other places in section 31—in the definitions of lawyer and notary public, neither of which Prairie Centre considered. Why is it found in those definitions? Because a lawyer or notary public qualifies to provide advice to an individual proposing to execute a guarantee, and to issue the certificate confirming that advice, only where the lawyer or notary public “has not prepared any documents on behalf of the creditor relating to the transaction”: SFSA, ss. 31(1)(c) and (d).

[117] My answer to the question the Saskatchewan Court posed in paragraph 22 of its reasons is: Because the drafters decided that a lawyer or notary public who prepares documents for a mortgagee or a secured party of a farmer (mortgagor) in a transaction cannot be considered independent. But that does not mean that a person who grants a chattel mortgage to a creditor is a mortgagor. And, if a person is not a mortgagor, they are not a farmer.

[118] I accept that a creditor other than a mortgagee (that is, a secured party) may rely on a guarantee, but that does not necessitate concluding that a mortgagor includes a chattel mortgagor. In paragraphs 122 to 124 below, I give some examples where that might arise. However, in my view, the definition of creditor in section 31 has no bearing on the interpretation of farmer or mortgagor.

(b) Other assets used in farming

[119] I turn now to the third ground relied on in Prairie Centre to support its conclusion regarding the meaning of mortgagor: that the definition of guarantee refers to “indebtedness of a farmer in relation to farm land or other assets used in farming”. In this regard, the Saskatchewan Court stated:

[23] However, the clearest expression of the legislation's intent is found in the wording of s. 31(1)(b) itself:

31(1)(b) ... in relation to farm land or other assets used in farming, but does not include guarantees entered into prior to the coming into force of this Act;

[Emphasis added]

[24] In my view the wording of the section clearly is meant to expand the use of guarantees beyond farm land situations to guarantees pertaining to non real property assets. There cannot be any other logical reason for including the words "or other assets used in farming" immediately after the word "land".

[25] Accordingly, putting all the above together I find that a farmer is a form of a mortgagor (that can be different than a real property mortgagor) who grants security over other assets used in farming (again other than or addition to farm land).

The emphasis in this passage is that of the Saskatchewan Court.

[120] I disagree.

[121] Section 31 cannot be described as the clearest expression of the legislator’s intent regarding the meaning of mortgagor. Mortgagor is not used in section 31—farmer is. While section 31 may extend beyond guarantees of mortgages on farm land, that does not necessitate extending the meaning of mortgagor—and so farmer—to include a chattel mortgagor. Three examples come immediately to mind.

[122] Assume a corporation engaged in farming borrows funds to purchase machinery and equipment for use in its farming operations and secures that indebtedness with a mortgage on its farm land and a guarantee from its individual shareholders. That corporation would qualify as a farmer (real property mortgagor) notwithstanding that the indebtedness secured by the mortgage is in relation to assets (other than farm land) used in farming.

[123] Alternatively, assume that a corporation borrows funds to purchase machinery and equipment and farm land, granting security for the two loans over all of the purchased assets. The shareholders agree to guarantee the loans. Again, the corporation would qualify as a farmer (real property mortgagor) notwithstanding that the guaranteed indebtedness relates to farm land and other assets used in farming. In this case, the lender (creditor) would be both a mortgagee (with respect to the mortgage) and a secured party (with respect to the secured interest in the machinery and equipment). In fact, there might be two separate lenders for these loans—one a mortgagee and the other a secured party—each of whom seeks guarantees of indebtedness of a farmer—a corporation that has granted a mortgage on farm land and so is a mortgagor.

[124] As a third example, assume a corporation that previously granted a mortgage on its farm land seeks to borrow money from a third party to purchase farming equipment. As security for repayment of the loan, that lender seeks a security interest in the purchased equipment as well as a guarantee from the shareholders. Having granted a mortgage on its farm land, the corporation would be a mortgagor (and so a farmer) notwithstanding that the guaranteed loan relates to farming equipment.

[125] These are but three examples in which limiting the meaning of mortgagor to a person who has granted a mortgage over farm land gives ample meaning to the phrase “or other assets used in farming” in section 31. Protecting farmers under these mortgages would be entirely consistent with the stated purpose of Part II of the SFSA and the provisions in it, including section 31: “to afford protection to farmers [(mortgagors of farm land)] against loss of their farm land”.

[126] In my view, the phrase “or other assets used in farming” has no bearing on the meaning of farmer (or mortgagor).

(vi) Conclusion on Context

[127] In my view, a contextual analysis supports only one conclusion. A person who has granted a chattel mortgage cannot thereby qualify as a mortgagor for purposes of the SFSA. To qualify as a mortgagor, the person must have granted a mortgage over farm land or be within one of the specific inclusions in the definition of mortgagor.

[128] I recognize that the Saskatchewan Court in Prairie Centre came to a different conclusion, and the Federal Court adopted that analysis. However, in my view, the contextual analysis in Prairie Centre was incomplete.

[129] While recognizing that the definitions of mortgage, mortgagee and mortgagor “appear to concentrate on real property situations” (Prairie Centre at para. 13), the Saskatchewan Court did not address how that context, or the broader context of related provisions and the SFSA as a whole informed the meaning of mortgagor. The only context it considered is section 31 which, for reasons I have explained, has little if any bearing on the interpretation to be given to a term that is not used in section 31, is used in many other provisions in the SFSA, and has one definition that applies, except as expressly modified, for all of these provisions, including the definition of farmer in Part II.

[130] I also note that Prairie Centre did not refer to Bank of Montreal v. Coutts (1992), 99 Sask. R. 144, 87 D.L.R. (4th) 352 (SKQB) [Coutts]. While not concerned with section 31, the issue in Coutts was whether a mortgagee could pursue a guarantor in respect of a deficiency claim related to a farm land purchase loan. Under Part II of the SFSA, a creditor’s claim against the mortgagor is limited to the real property. In Coutts, the guarantor asserted this protection extended to him because he had guaranteed a mortgage for the purchase of farm land.

[131] The Saskatchewan Court observed that “[n]ot every person and not every debt comes within the purview” of the SFSA and Part II “limits the protection to only those debts incurred to purchase farmland and to those farmers who as mortgagors have incurred such debt” (at para. 7). In relation to the term “farmer”, the Court in Coutts said at paragraph 21:

In the instant case, I conclude that the defendant is not a farmer within the meaning of s. 3(c) of the Act because he is not a mortgagor. His farmland is not a part of or subject to the relevant mortgage. He is not in jeopardy of losing his farmland. This being so, he is not a person for whom the legislation was intended to provide protection.

[Emphasis added.]

See also Bank of Montreal v. Wakaw Enterprises Ltd. et al. (No. 2), 90 Sask. R. 17 (SK QB), 1990 CanLII 7409.

D. Purpose

[132] To complete the statutory interpretation analysis, I must consider the purpose of the definition of mortgagor. It is the purpose of that term, not the purpose of section 31, that is relevant both because the definition of mortgagor in section 2 applies for all purposes of the SFSA (except to the extent specifically modified) and because mortgagor is not used in section 31.

[133] The purpose of the term mortgagor is best determined by examining how it, and the related terms mortgage and mortgagee, are used. Mortgagor appears in the SFSA more than 50 times, mortgage more than 100 times, and mortgagee more than 80 times. With the exception of the definitions in Part I and section 109 (which authorizes the making of regulations), these terms are used exclusively in Parts II and III. Consistent with their titles (Farm Land Security and Home Quarter Protection) and, in the case of Part II, its stated purpose, the focus of these Parts is on rights and obligations concerning indebtedness secured by farm land including a farmer’s homestead. The terms mortgage, mortgagor and mortgagee serve to identify the parties to the form of agreement that provides the security that is the subject of these Parts—a mortgagor grants a mortgage over farm land to a mortgagee.

[134] For similar reasons, the terms associated with security interests in personal property—purchase money security interest, secured party, security agreement, and security interest—are used almost exclusively in Parts IV and V, the exceptions being sections 41 and 42, and the definition of creditor in section 31. Parts IV and V of the SFSA deal with secured debt other than mortgage debt and judgment enforcement and, consistent with that purpose, these terms identify the relevant parties and relationships—a producer (farmer) grants a security interest to a secured party under a security agreement.

[135] In my view, it is therefore clear that the purpose of the term mortgagor is to identify a person who has granted security in the form of a mortgage over real property that is farm land and/or a homestead.

E. Conclusion on the Meaning of Farmer/Mortgagor

[136] For purposes of section 31, a farmer is a mortgagor. In my view, applying a textual, contextual and purposive interpretation, a mortgagor is a person who has granted a mortgage over farm land or is otherwise described in the specific inclusions in the definition of mortgagor in section 2 of the SFSA. A chattel mortgagor is not a mortgagor for purposes of the SFSA.

F. Conclusion on the Appeal

[137] Because I would dismiss the cross-appeal, the only issue on this appeal is whether the Joint and Several Guarantee executed by the Bezans falls within the definition of guarantee in section 31 of the SFSA. In order to fall within that definition, Bezan Cattle must be a farmer as defined for that purpose.

[138] There is no genuine issue for trial if there is no legal basis for the claim based on the law or the evidence brought forward or if the judge has the evidence required to fairly and justly decide the dispute: Manitoba v. Canada, 2015 FCA 57 at para. 15, citing Burns Bog Conservation Society v. Canada, 2014 FCA 170 at paras. 35-36 and Hryniak v. Mauldin, 2014 SCC 7 at para. 66 [Hryniak]. In my view, unless Bezan Cattle is a mortgagor, section 31 of the SFSA does not apply.

[139] The party seeking summary judgment has the onus of establishing that there is no genuine issue for trial. However, parties responding to such motions are also required to “put their best foot forward” in their response: Milano Pizza Ltd. v. 6034799 Canada Inc., 2018 FC 1112 at para. 34 [Milano Pizza] and Gupta v. Canada, 2021 FCA 31 at para. 29 [Gupta]. As this Court has said, this may be described as requiring a responding party to “lead trump or risk losing”: Gemak Trust v. Jempak Corporation, 2022 FCA 141 at para. 67, citing Milano Pizza at para. 35.

[140] There is no evidence on the record that Bezan Cattle is a farmer within the meaning of section 31 of the SFSA. Although the Bezans asserted the protection of section 31, they led no evidence that Bezan Cattle owned land or had granted a mortgage over land.

[141] Therefore, I would allow the appeal. In the circumstances I see no benefit in remitting the matter back to the Federal Court for determination. The evidence before the Federal Court is also before us. Accordingly, I would make the order the Federal Court should have made and grant summary judgment against the Bezans, as permitted by subparagraph 53(1)(b)(i) of the Federal Courts Act, R.S.C. 1985, c. F-7.

G. Other Grounds of Appeal

[142] Given this conclusion, it is neither necessary nor desirable to address the other arguments advanced by the Attorney General in support of the position that section 31 does not apply. Those arguments are best left for another case. However, my silence should be viewed as only that. I express no view about whether the Federal Court erred in its analysis of the other interpretive elements of section 31 it identified, as described in paragraph 30 above.

V. The Cross-Appeal

[143] Having dealt with the appeal, I turn now to the cross-appeal.

[144] The Federal Court granted summary judgment against Bezan Cattle, concluding that it had sufficient evidence to determine the relevant facts, there were no credibility issues, and there was no genuine issue for trial.

[145] Bezan Cattle asserts that the Federal Court erred in deciding there was no genuine issue for trial and in holding Bezan Cattle liable for the funds applied for and advanced to BFI. It asks that the judgment against Bezan Cattle be set aside and the action against it be dismissed in its entirety or alternatively that the matter against it be determined by trial.

[146] The Attorney General says the Federal Court made no errors and the cross-appeal should be dismissed.

A. No Genuine Issue for Trial

[147] Whether there is a genuine issue for trial for the purposes of a motion for summary judgment is a question of mixed fact and law: Badawy v. Igras, 2019 FCA 153 at para. 6. Thus, absent an extricable error of law, the conclusion there is no genuine issue for trial is reviewable on a standard of palpable and overriding error: Hryniak at para. 81.

[148] Bezan Cattle does not suggest that the Federal Court identified the incorrect test for determining whether there is a genuine issue for trial. Rather, says Bezan Cattle, the Federal Court erred in concluding that it had the evidence necessary to make the necessary findings of fact because the Minister did not present the necessary evidence.

[149] Bezan Cattle’s submission in support of this position rests on the Minister’s failure to submit an affidavit of Jim Juacalla, the MLCA representative with whom the Bezans engaged in connection with the applications, but whose employment with MLCA ended prior to the motion for summary judgment. This, says Bezan Cattle, led the Federal Court to incorrectly prefer the Minister’s evidence concerning the changes to the applications, although that evidence was not firsthand, over the firsthand evidence of the Bezans. Instead, Bezan Cattle asserts, the Federal Court should have drawn an adverse inference from the Minister’s failure to provide Mr. Juacalla’s evidence.

[150] The Federal Court did not prefer the Minister’s evidence. Rather, it expressly accepted the Bezans’ evidence “so far as it goes”. However, in its view, accepting that evidence was not inconsistent with concluding that the Bezans’ actions subsequent to 2008 caused Bezan Cattle to accept legal liability for the two advances: reasons at para. 84.

[151] While the nature of the adverse inference Bezan Cattle sought does not appear to have been articulated to the Federal Court (see reasons at paragraph 51), Bezan Cattle now explains it is that Mr. Juacalla would confirm the Bezans’ evidence that they did not authorize changes to the applications. Because the Federal Court accepted that evidence, any failure to draw that adverse inference is irrelevant to the result.

[152] Bezan Cattle has not persuaded me that the Federal Court erred in concluding that there is no genuine issue for trial.

B. Did the Federal Court Err in Holding Bezan Cattle Liable for Both Advances?

[153] Bezan Cattle also asserts that the Federal Court erred in concluding that Bezan Cattle was liable for the funds applied for and advanced to BFI. In particular, it argues the Federal Court:

(i) incorrectly pierced the corporate veil, failing to treat BFI as a separate entity from Bezan Cattle;

(ii) incorrectly failed to recognize the absence of consideration for any agreement by Bezan Cattle to be responsible for the advance made to BFI; and

(iii) incorrectly concluded that the actions of Bezan Cattle and the Bezans constituted their acceptance that Bezan Cattle would be liable for the advance made to BFI.

[154] I see no merit to these claims.

[155] In support of the first point, Bezan Cattle points to a single phrase from paragraph 78 of the Federal Court’s reasons, that “the defendants received the [emergency advance] and the [continuous flow] Advance,” pointing out that BFI is not a defendant. With respect, that statement is not the foundation of the Federal Court’s analysis; it appears in the context of the Federal Court distinguishing a case relied on by Bezan Cattle and the Bezans in support of their submissions that the alterations to the agreements were fraudulent. Reading the Federal Court’s reasons as a whole, there is no doubt that the Federal Court understood that BFI and Bezan Cattle were separate entities.

[156] As to the second point, Bezan Cattle asserts that it cannot be liable for amounts advanced to BFI because it received no consideration for assuming that liability. I see nothing on the record suggesting this argument was advanced before the Federal Court. Ordinarily a new issue may not be raised on appeal, although an appellate court may depart from this general rule where the interests of justice require it and where the Court has a sufficient evidentiary record and findings of fact to do so: Quan v. Cusson, 2009 SCC 62 at paras. 36-39. I am not satisfied this is a case where we should depart from the general rule.

[157] Nothing in the affidavits filed by the Bezans refers to a lack of consideration. Ms. Bezan’s affidavit states some of the money advanced to Bezan Cattle was used to pay BFI’s accounts receivable (although I think this must mean accounts payable). Beyond that, there is next to no information about financial or other arrangements between the two corporations or between the two corporations and the Bezans, or what arrangements the two corporations might have had concerning the two advances. As the Federal Court observed, “[p]arties responding to motions for summary judgment are required to ‘put their best foot forward’ in their response”: reasons at para. 44, citing Gupta at para. 29 and Milano Pizza at para. 34.

[158] As to the third point, the Federal Court considered Saint John Tug Boat and Strata Owners. It then reviewed in detail what it described as the “clear and unequivocal, repeated evidence over a long period of time demonstrating that both parties reasonably expected, and [Bezan Cattle] agreed in substance, that [Bezan Cattle] would be legally responsible to repay”: reasons at para. 64. Relying on the principles from Saint John Tug Boat and Strata Owners, the Federal Court was satisfied that Bezan Cattle, through its conduct, agreed to repay the advances in accordance with the terms of the repayment agreements.

[159] Bezan Cattle asserts its case is distinguishable from Saint John Tug Boat because, in that case, there was no dispute concerning the parties to the contract. Moreover, it says the Federal Court should have concluded that the Bezans and Bezan Cattle had a reasonable expectation that the agreement with MLCA would not be “unilaterally altered without their consent”. In substance, these arguments are the same as those addressed in paragraphs 149 and 150 above.

[160] Again, I have not been persuaded the Federal Court made any reviewable errors in coming to its conclusion that Bezan Cattle was liable for the two advances.

C. Conclusion on the Cross-Appeal

[161] Having found the Federal Court did not make any reviewable error in granting summary judgment against Bezan Cattle, I would dismiss the cross-appeal.

VI. Conclusion

[162] I would allow the appeal, set aside the judgment of the Federal Court dismissing the application against the Bezans and, making the order the Federal Court should have made, issue summary judgment against the Bezans.

[163] I would dismiss Bezan Cattle’s cross-appeal.

[164] The Attorney General seeks costs on the appeal and the cross-appeal. As the Attorney General was entirely successful on both, and the issues were sufficiently distinct, I would award the Attorney General costs for both the appeal and cross-appeal.

"K.A. Siobhan Monaghan"

“I agree

Donald J. Rennie J.A.”

“I agree

Sylvie E. Roussel J.A.”

 

APPENDIX

 

 

 

 

FEDERAL COURT OF APPEAL

NAMES OF COUNSEL AND SOLICITORS OF RECORD

DOCKET:	A-154-21
STYLE OF CAUSE:	HIS MAJESTY THE KING v. BEZAN CATTLE CORPORATION et al.
PLACE OF HEARING:		Ottawa, Ontario
DATE OF HEARING:		November 16, 2022
REASONS FOR JUDGMENT BY:		MONAGHAN J.A.
CONCURRED IN BY:		RENNIE J.A. ROUSSEL J.A.
DATED:		MAY 9, 2023

APPEARANCES:

Don Klaassen Stephen McLachlin	For The Appellant
Shawn Patenaude Courtney Yaremchuk	For The Respondents

SOLICITORS OF RECORD:

Shalene Curtis-Micallef Deputy Attorney General of Canada	For The Appellant
Shawn Patenaude Legal Prof. Corp Yorkton, Saskatchewan	For The Respondents