QUEEN’S BENCH FOR SASKATCHEWAN Citation: 2014 SKQB 81 Date: 2014 03 20 Docket: Q.B.G. No. 1510 of 2013 Judicial Centre: Saskatoon BETWEEN: VALERIE ROLANDA LOZINSKI, as personal representative of the Estate of the Late Kenneth Roebuck and THIESSEN BROS. Counsel: Adam R. Touet for the applicant Devin J. Dubois and Brian E. Cox for the respondent JUDGMENT SCHERMAN J. March 20, 2014 Introduction [1] The applicant asks that the registration of mortgage against land be discharged on the basis that the limitation period to enforce the mortgage has expired. The respondent says the limitation period has not expired because The Saskatchewan Farm Security Act, S.S. 1988-89, c. S-17.1 (the “Farm Security Act”) provides for suspension of limitation time running while certain proceedings are underway pursuant to that Farm Security Act. [2] Whether the limitation period has expired or not depends on the proper interpretation to be given to the Farm Security Act and The Limitation of Actions Act, R.S.S. 1978, c. L-15 (the Limitations Act), which was the applicable limitation period legislation at the relevant times. This issue and the interpretations in question have not previously been considered by this court. [3] In 1981 Kenneth Roebuck mortgaged the subject land to the respondent to secure the repayment of then $36,000 debt. The respondent`s mortgage was registered at the Land Titles Office. This registration continues to date as Interest Registration No. 106597705. [4] On February 28, 1996, Kenneth Roebuck signed an acknowledgement and repayment agreement which acknowledged that $25,000 remained owing and secured by the mortgage. It set out repayment schedule for the payment of this balance. It is agreed that this acknowledgement created new limitation period running from that date. [5] On February 28, 2006, the respondent served notice of intention to foreclose upon Kenneth Roebuck pursuant to s. 12 of the Farm Security Act. This service had the effect of suspending the running of the limitation period clock. The matter was not resolved by mediation under the provisions of the Farm Security Act, but no steps were taken by the respondent to obtain leave or to actually commence foreclosure proceedings pursuant to its February 28, 2006 notice of intention. The reasons why the matter did not advance beyond mediation are not in evidence. [6] Kenneth Roebuck died on September 14, 2012. His executrix, the applicant and the ultimate beneficiary of the subject land, brought the application now before the court on October 28, 2013. On February 28, 2014, counsel for the respondent filed new notice of intention pursuant to the Farm Security Act. The Parties` Positions [7] The respondent argues that on proper interpretation of the Farm Security Act, the running of the limitation period was suspended on the filing of the February 28, 2006 notice of intention and remains suspended. This it says is because the clear language of s. 22(1) directs that the suspension commences on the day on which notice of intention is served and ends on the day that “an order is made pursuant to subsection 11(1) with respect to that application”. [8] The applicant`s position is that the review and mediation process mandated under the Farm Security Act is to be completed within 150 days of the service of the notice of intention and s. 12(16) provides that if the mortgagee does not make such an application within three years “the notice of intention is deemed to have expired”. Thus the applicant says at the end of such three years the limitation period began to run again and promptly thereafter expired. The Legislation [9] The following sections of the Farm Security Act that need to be interpreted and applied on this application are: 11(1) Where mortgagee makes an application with respect to 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; or (b) make an order for the purposes of clause 9(1)(f). (2) Where an order is made pursuant to subsection (1), the mortgagee may commence or continue an action with respect to that mortgage. (3) Any action that is commenced without an order pursuant to this section is nullity, and any order made with respect to an action or proposed action without an order pursuant to this section is void. 12(16) Where an application to the court pursuant to section 11 has not been made within three years after the day on which 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 further notice pursuant to subsection (1) is served. 22(1) The period: (a) commencing on the day on which 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 mortgage with respect to farm land. [10] The purpose of the Farm Security Act is stated in s. to be “to afford protection to farmers against loss of their farm land”. Part II of the Farm Security Act, within which the above-quoted sections appear, establishes mechanism and process to achieve this purpose. [11] The mechanism for and process for the provision of this protection can be summarized as follows: a) Section 9(1)(d) provides that subject to ss. 11 to 21 no person shall commence an action with respect to farm land. b) Section 11 provides that where mortgagee makes an application the court may, on any terms that it considers just and equitable order that s. 9(1)(d) does not apply. c) The procedure mortgagee must follow prior to making s. 11 application is detailed in s. 12 of the Farm Security Act, which summarize as follows: i) mortgagee can make an application for s. 11 order only upon the expiry of 150 days after serving notice of intention, to make such an application, on the board and the farmer s. 12(1); ii) Within 60 days following the service of the notice of intention, the board is to complete review of the financial affairs of the farmer and provide its report thereon to the farmer, the mortgagee and mediator it appoints s. 12(2) and (3); iii) Within 105 days of the service of the notice of intention (or such longer period as the parties may agree) mediation is to occur s. 12(6); iv) On expiry of the mediation period and prior to the expiry of the 150-day period fixed in s. 12(1), the board is to complete written report that addresses factors set out in s. 12(12) of the Farm Security Act including whether the farmer has reasonable possibility of meeting his obligations under the mortgage and whether he is making sincere and reasonable effort to meet his obligations s. 12(13); v) The board is required to submit its report to the court on notice from the mortgagee that an application has been made to the court for an order pursuant to s. 11 s. 12(15); vi) Where an application is not made to the court within three years after the date on which the notice of intention was served, the notice of intention is deemed to have expired but the mortgagee may serve further notice s. 12(16); vii) If an application is made to the court, s. 13 outlines presumptions that apply and circumstances and considerations the court is to consider when deciding whether or not to grant leave to commence foreclosure proceedings in the circumstances. [12] The parties agree that, but for suspension of the running of the limitation period pursuant to s. 22 of the Farm Security Act, the limitation period for the enforcement of this mortgage would have expired. [13] In Wylie Farms Ltd v. Shiffman, 2011 SKQB 70 (CanLII), 369 Sask.R. 207, Justice Currie of this court held that the expiration of the limitation period not only precludes commencement of foreclosure action but also extinguishes the mortgagee’s rights under the mortgage in respect of the land. Accordingly he held that, in such circumstances, the registered owner of the land is entitled to obtain an order of the court discharging the registration of the mortgage from title. Based upon this authority it follows that the applicant is entitled to the relief she seeks if the limitation period has expired. [14] The respondent argues that pursuant to s. 22, the time period commencing on the day on which notice of intention is served and ending on the day that an order is made with respect to that application (emphasis added) is not to be included in the calculation of time. It says that the clear language of the legislation directs that once service of notice of intention is perfected, only an order pursuant to s. 11(1) will restart the limitation period clock. [15] It argues that while s.12(16) deems the notice of intention to have expired for the purposes of s. 12 after three years, it also contemplates further notice of intention being served. The respondent says the legislation has created what its counsel describes as an evergreen mediation process and that in exchange for having the burden of the protection process imposed upon mortgagees, the legislature has provided an offsetting protection for the mortgagee which is that the suspension of time running continues until the mortgagee actually obtains an order. [16] The respondent argues that when s. 12(16) states that the notice of intention is deemed to have expired for the purposes of this section (emphasis added), this expiration, by virtue of the specific words of statute, limited its operation to s. 12 and cannot be extrapolated into s. 22. It says that the literal language of s. 22 makes it clear that the intention of the legislature was to stop the limitation clock until there was court order pursuant to s. 11(2). [17] Whether or not the limitation period has expired depends upon the proper interpretation of the provisions of both the Farm Security Act and the Limitations Act. The Interpretation Act, 1995, S.S. 1995, c. I-11.2, states as follows: 9(1) Every enactment shall be interpreted as always speaking. (2) Where provision in an enactment is expressed in the present tense, the provision applies to circumstances as they arise. 10 Every enactment shall be interpreted as being remedial and shall be given the fair, large and liberal construction and interpretation that best ensure the attainment of its objects. [18] Since its 1984 decision in Stubart Investments Ltd. v. R., 1984 CanLII 20 (SCC), [1984] S.C.R. 536, 10 D.L.R. (4th) 1, the Supreme Court of Canada has consistently applied the so-called “modern principle of statutory interpretation” as enunciated in Elmer A. Driedger, Construction of Statutes, 2d ed. (Toronto: Butterworths, 1983), where the author stated, at page 87, the principle as follows: Today there is only one principle or approach, namely the words of an Act are to be read in their entire context in their grammatical and ordinary sense harmoniously with the scheme of the Act, the object of the Act and the intention of Parliament. [19] In Acton v. Britannia (Rural Municipality, No. 502), 2012 SKCA 127 (CanLII), 405 Sask.R. 180, Klebuc C.J.S. writing for the court said the following: 17 Under Driedger’s modern principled approach, court’s primary duty is to harmonize the grammatical meaning of the text with the other indicators of legislative intent gleaned from reading the text in its entire context. (See Ruth Sullivan, Sullivan on the Construction of Statutes, 5th ed. (Markham, Ontario: LexisNexis Canada, 2008) at 24, 42, 45 and Ratzlaff Estate, Re, 2002 SKCA 53 (CanLII), 217 Sask. R. 284 at para. 23.) However, reliance on these other indicators is subject to the following constraint: the interpretation ultimately adopted must be one that the words of the text can reasonably bear. This is the plausible meaning rule. (See Sullivan, supra at 163.) An interpretation of the text sets up presumption that this is indeed the interpretation intended by the legislature. The presumption in favour of ordinary meaning is rebutted by evidence derived from other statutory interpretation tools that another meaning was intended or is more appropriate in the circumstances. 18 Ruth Sullivan suggests that the following questions must be considered when interpreting statutory provision: What is the meaning of the legislative text? What did the Legislature intend? That is, when the text was enacted, what law did the Legislature intend to adopt? What purposes did it hope to achieve? What specific intentions (if any) did it have regarding facts such as these? What are the consequences of adopting proposed interpretation? Are they consistent with the norms that the legislature is presumed to respect? (See: Sullivan at p. 3) [20] The literal or grammatical meaning of the words used in s. 22 does indeed seem to direct that the stopping of the limitation period clock continues until an order is made pursuant to s. 11(1) of the Farm Security Act. However, the interpretation exercise does not stop with the literal or grammatical meaning of the words used. To restate what Klebuc C.J.S. said in Acton, the court’s primary duty is to harmonize the grammatical meaning of the text with the other indicators of legislative intent gleaned from reading the text in its entire context. If such other indicators lead to different conclusion as to the legislature’s intent, the presumption in favour of the ordinary meaning is rebutted by such other indicators of legislative intent, provided only that the interpretation ultimately adopted is one which the words of the text can reasonably bear. [21] The intention of the legislature in suspending the running of the limitation period clock by provisions of the Farm Security Act cannot be considered in isolation from the legislature’s concurrently expressed intent with respect to limitation periods generally. For good and sound reasons, limitation periods exist and are to be enforced. Inherent in the Farm Security Act creating an exception, is the recognition of the general rule. Thus it follows that the exception should be viewed as being there only to achieve the legislative purpose of the legislation. [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 reasonable possibility of meeting their obligations under their mortgages and if they are making 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 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 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 reasonable possibility of and who are making sincere and reasonable effort to meet their obligations. The mechanism created to accomplish this objective included stopping of the limitation period clock, to the extent necessary to prevent the above-noted injustice to mortgagors. But, there is nothing in the legislation, save the words used in s. 22, that reveals an intention to keep the limitation period clock stopped beyond the three-year period when notice of intention expires. [26] There is no apparent policy or juristic reason for the legislature to stop the limitation period clock for farm mortgages either permanently or for period of time beyond that reasonably required by reason of the burdens or impediments imposed on mortgagees by the legislation. Interpreting s. 22 of the Farm Security Act as the respondent argues would lead to an absurd result. The debt is now 18 years from its last acknowledgement and would have ceased to be enforceable on March 1, 2006, but for the service of notice of intention under the Farm Security Act the day previous. Now further eight years later the respondent argues that the limitation period has not started to run again notwithstanding the expiration of the notice of intention on March 1, 2009, and the respondent’s failure to initiate any action. In effect the respondent`s position is that by serving its initial notice of intention, it obtained perpetual right to commence enforcement proceedings without regard to any limitation periods. [27] This absurd result would not flow just to the respondent in its unique circumstances. Acceptance of the respondent`s interpretation of the Farm Security Act would lead to situation where any and all mortgagees of farm lands could entirely avoid any limitation period applying to their mortgage by the simple devise of serving notice of intention under the Farm Security Act. [28] The precise mischief the Limitations Act is directed at is delay and inaction on the part of debtors and other contractual obligees. The Limitations Act requires debtors and contractual obligees to commence enforcement proceedings within the applicable limitation period, failing which the right to enforce is lost. The legislature could not have intended what the respondent argues. The purpose of the Farm Security Act is to provide farmers protection from the loss of their farm lands where short-term economic conditions have created temporary financial problems, not to provide mortgagees of farm lands with mechanism to make limitation periods eternally inapplicable to their mortgages. [29] Subsection 12(1) gives mortgagee the right to apply to the court for s. 11 order only after the expiry of 150 days from the date of service of the notice of intention. Subsection 12(16) then states that when an application has not been made within three years after the date of service, the notice of intention is deemed to have expired for the purposes of this section. [30] The purposes of this s. 12 are outlined in s. 12. The purposes are to provide the 150-day period within which the board can complete review of the financial affairs of the farmer, appoint mediator, provide its financial review to the farmer, mortgagee and mediator, provide the opportunity for the mediator to attempt mediation and for the mediator to file his or her mediation report, and for the board to prepare its report so that it is available for filing with the court on notice from the mortgagee that an application has been made. [31] am satisfied that the intention of the legislature was that mortgagee, to whom the Farm Security Act applied, could suspend the limitation period clock running from and after servicing 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. [32] The interpretation which am giving s. 22 of the Farm Security Act is one which the words of the text can reasonably bear. It does not limit the limitation period the respondent would otherwise have had available to commence his foreclosure action. 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. [33] If the respondent brought its application for s. 11 order and been refused such order, the limitation period suspension would have further continued for another one-year period by virtue of s. 20 of the Farm Security Act. Then provided the respondent served new notice of intention within such one-year period, it would once again have the effect of stopping the limitations clock. But, mortgagees wishing to keep the limitation period stopped must act within the specified periods. If they let the three-year period expire without making an application, the notice of intention and the resulting stopping of the limitation period clock both expire. [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. Conclusion [35] Having concluded that the limitation period for the commencement of an action to enforce the respondent`s mortgage has expired, it follows, for the reasons outlined in para. 13 above that the registration of the mortgage must be ordered discharged as requested. (1) The Registrar be directed to discharge Interest Register No. 106597705 from title to the property legally described as follows: Surface Parcel #131038905 Reference Land Description: SW Sec 36, Twp 43, Rge 08, W3, Extension As described on Certificate of Title 77B11021; and (2) The applicant shall have the taxable costs of her application against the respondent.
Limitation of Actions – Mortgage – Saskatchewan Farmland SecurityHELD: When s. 12 of The Saskatchewan Farm Security Act was enacted it was the legislature’s intention that a mortgagee, to whom The Saskatchewan Farm Security Act applied, could suspend the limitation period clock from running and after serving a notice of intention to enforce its security, provided that within three years of such service the mortgagee made 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, the limitation period begins to run again. The notice of extension in this case expired in 2009 and the limitation clock began to run again. The limitation period for the commencement of an action to enforce the respondent’s mortgage has expired and the registration of the mortgage is ordered discharged.