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AGRICULTURE - Farms - Financing - Creditors’ relief - Scope of protection

Tuesday, September 15, 2020 @ 8:46 AM  

Lexis Advance® Quicklaw®
Appeal by Naber and TK Equipment from the dismissal of their application seeking temporary relief from forfeiture of equipment. The appellants entered into four agreements for the purchase of $2,305,000 in farm equipment financed through the respondent. The appellants paid more than 75 per cent of the purchase price before they fell into arrears. They owed $563,240 on the equipment, which was valued at $954,906. The equipment was essential to the appellants’ farming operations. The appellants claimed they were unable to make payments because of a poor harvest in 2018 and an inability to market canola because of China’s trade embargo. The appellants sought forbearance until grain could be sold pursuant to identifiable grain delivery contracts. The chambers judge found the appellants failed to establish that their inability to pay arose from temporary circumstances.

HELD: Appeal allowed. The chambers judge applied the wrong test to the appellants’ application. The test to be applied was what was “just” in the circumstances. The Saskatchewan Farm Security Act did not require the appellants’ inability to meet their payments result from temporary hardship, although it was a relevant factor to consider in determining what was just. The chambers judge’s failure to identify the correct test led her to overlook relevant factors in arriving at her determination, which constituted an error of law. The respondent was well secured and would remain so even if forbearance was granted. Given the purpose of the Act, the purpose of the contracts at issue, the appellants’ equitable interest in the equipment, the value of the equipment and its essential nature to the appellants’ ongoing farming operations, it was “just” that the relief requested be granted. As the grain delivery contracts were no longer available for assignment, the matter was remitted to the Court of Queen’s Bench for reconsideration based on updated evidence.

Naber v. John Deere Financial Inc., [2020] S.J. No. 296, Saskatchewan Court of Appeal, J.A. Ryan-Froslie, R. Leurer and B. Barrington-Foote JJ.A., August 6, 2020. Digest No. TLD-September142020003