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AGRICULTURE - Farms - Financing - Creditors’ relief

Thursday, May 07, 2020 @ 9:24 AM  

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Appeal by HCI Ventures from refusal of summary judgment for monies owed by SOL Acres under a farmland lease. Appeal by SOL Acres from a subsequent judgment in respect of the debt claimed by HCI. In February 2014, the parties entered into a written two-year farmland lease. SOL provided security for its performance of the lease obligations. In November 2014, SOL failed to pay the second instalment of 2014 rent. In March 2015, SOL defaulted on its 2015 rent obligations and abandoned the lease. In June 2015, HCI commenced litigation seeking compensation for rental arrears, unpaid property taxes and related relief. In February 2017, following a two-month stay pursuant to the Farm Debt Mediation Act, HCI applied for summary judgment. In September 2017, the application was dismissed. The chambers judge found that HCI failed to give notice pursuant to s. 21 of the Farm Debt Mediation Act (FDMA), rendering its action null and void. In October 2017, HCI appealed, issued SOL a s. 21 notice, and recommenced its action. SOL contended the two-year limitation period had expired. The chambers judge found that the limitation period was extended by SOL’s acknowledgment of the debt, and thus the action was within time. SOL was ordered to pay $687,137 in rent arrears, taxes and interest. SOL appealed.

HELD: Appeals dismissed. A plain reading of s. 21 of the FDMA supported the chambers judge’s finding that HCI’s commencement of a debt recovery proceeding was sufficient to trigger the provision’s notice requirements. That interpretation accorded with the FDMA’s purpose to provide an opportunity for farmers to mediate with secured creditors. To find otherwise would promote uncertainty and adversely impact the remedial aspect of the FDMA. The fact that HCI’s action was framed as a claim for damages rather than debt recovery did not take it outside of the scope of the notice requirements of s. 21. The chambers judge appropriately held that the essence of the action was for the recovery of a debt, as there was no injury claimed requiring an assessment of damages. With respect to SOL’s appeal of the second judgment, the chambers judge did not err in concluding the second action was not barred by the Limitations Act. The finding that HCI’s first action was a nullity did not mean that SOL’s brief of law acknowledging the debt was itself null and void. The brief of law met all the requirements for extending the limitation period. No reasonable apprehension of bias was established with respect to the second judgment.

HCI Ventures Ltd. v. S.O.L. Acres, [2020] S.J. No. 73, Saskatchewan Court of Appeal, J.A. Ryan-Froslie, L.M. Schwann and J.D. Kalmakoff JJ.A., March 12, 2020. Digest No. TLD-May42020008