J. THE COURT OF APPEAL FOR SASKATCHEWAN Citation: 2005 SKCA 97 Date: 20050802 Between: Docket: 698 Langham Credit Union Limited and Gari Holdings Ltd. Coram: Bayda C.J.S., Lane Richards JJ.A. Counsel: Donald H. Layh for the Appellant James W.R. Taylor, Q.C. for the Respondent Appeal: From: 2002 SKQB 524 (CanLII) Heard: June 21, 2005 Disposition: Appeal allowed Cross-Appeal dismissed Written Reasons: August 2, 2005 By: The Honourable Mr. Justice Richards In Concurrence: The Honourable Chief Justice Bayda The Honourable Mr. Justice Lane Richards J.A. [1] This case concerns the fixture financing provisions of The Personal Property Security Act, 1993, S.S. 1993, c. P-6.2 (“PPSA”). The respondent Gari Holdings Ltd. claims damages from the appellant Langham Credit Union Ltd. The claim arises from the Credit Union’s delay in removing from Gari’s land a quonset in which the Credit Union held a security interest. The trial judge found in favour of Gari and awarded damages on the basis that the Credit Union became tenant at sufferance of Gari when it failed to remove the quonset and therefore was obliged to pay rent. [2] In order to resolve this appeal it is necessary to consider whether the PPSA precludes a claim by a land owner against a financer arising from the financer\'s failure to remove a fixture within a commercially reasonable time after giving notice of its intentions in that regard. If that issue is decided in Gari’s favour, it will also be necessary to consider the merits of the specific claims advanced by Gari against the Credit Union. [3] Gari leased vacant lot (“the Property”) in Nipawin to Lakeland Leisure Products Ltd. In 1997, Lakeland placed large metal quonset (“the Building”) on the Property. Prior to the Building being constructed, Lakeland granted security interest in it to financing company. That interest was then assigned to the Credit Union and registered in the Personal Property Registry. The Credit Union also registered fixture filing notice with the Prince Albert Land Titles Office. [4] Lakeland discontinued business in April of 1999. Gari advised the Credit Union that it wanted the Building removed, the municipal property taxes attributable to the Building paid, and the Property restored to its original condition. On July 23, 1999, Gari wrote to the receiver for Lakeland and repeated that position. [5] On August 27, 1999, the Credit Union served Gari with notice pursuant to s. 36 of the PPSA. The notice indicated the indebtedness secured by the Building and stated that the Credit Union intended to remove the Building within 15 days unless the indebtedness was discharged. [6] Gari responded to the notice by way of September 1, 1999 letter from its lawyer. The letter indicated that Gari, pursuant to ss. 36(10) and (11) of the PPSA, claimed reimbursement for damages expected to be caused by the removal of the Building. That amount was estimated at $3,000 to $3,500. Gari’s concern in this regard was that the metal walls of the Building were imbedded in concrete foundation and that removing the Building would involve cutting the walls and leaving behind the foundation with ridge of jagged metal protruding from it. The Credit Union responded with correspondence taking issue with Gari’s right to demand security pursuant to s. 36. [7] On November 5, 1999, Gari’s lawyer wrote to the Credit Union saying that Gari did not contest the Credit Union’s right to remove the Building and indicating that “all [Gari] wants is for the premises to be cleaned up to their original state”. The letter concluded by stating that Gari would not allow access to the Building unless $3,500 was paid into its lawyer’s trust account for purposes of covering the cost of cleanup. [8] The Credit Union then served second notice pursuant to s. 36 of the PPSA. It stated that the indebtedness secured by the Building as of that time, including interest, was $11,127.47 and indicated that the Credit Union intended to seize the Building within 15 days unless that amount was paid. [9] The Credit Union’s position prompted Gari to initiate proceedings in the Court of Queen’s Bench. At the end of December 2000, it applied for an order that removal of the Building be postponed until the Credit Union paid (a) $3,500 as security for reimbursement for possible removal damage; (b) rent of $500 per month from April 1999 through to the date the Building was removed, and (c) $2,818.04 of municipal property taxes for the period April 1999 to December 31, 2000. During the course of argument in this Court, Gari’s counsel advised that the relief in relation to rent and property taxes had been included in the motion not because those matters were conditions precedent to the Credit Union removing the Building but because, as Gari was going to be in court anyway on the matter of security for removal damage, it seemed useful to seek additional relief as well. [10] The Credit Union conceded the issue concerning payment of security very shortly before Gari’s motion was argued. In fiat dated February 8, 2001, Laing J. dismissed the application as it related to rent and reimbursement for taxes. He wrote as follows: The Applicant has been attempting to obtain the consent of the Langham Credit Union for similar order [concerning security in relation to reimbursement for damage] for over one year and it is appropriate to grant the Applicant costs of the application. With respect to the Applicant’s claim for occupation rent and reimbursement of taxes paid over the past year, this portion of the application is dismissed. The material suggests the Applicant had no use for the building and wished it removed from the outset. The appropriate remedy for it to follow in this case would be to seek mandatory injunction that the building be removed from the property and for damages suffered during the period of time after the demand that the building was not so removed. The Personal Property Security Act does not statutorily provide for general damage claim such as the one advanced by the Applicant in this matter. [11] The Building was sold to third party in the spring of 2001. However, it was not removed from the Property until the fall of 2002. That delay flowed, at least in part, from refusal by the Town of Nipawin to grant required permit to the purchaser until property taxes were fully paid. In order to facilitate matters, the Credit Union ultimately paid $2,964.71 to the Town in respect of the taxes. The Building was removed, the site returned to its original state and the $3,500 security deposit returned to the Credit Union. [12] For its part, Gari paid total of $6,227.88 in property taxes attributable to the Building during the time period when it says the Building remained on the Property after it should have been removed. That payment was made in order to avoid tax enforcement proceedings by the Town. II. The Queen’s Bench Decision [13] Gari launched the action which underpins this appeal in October of 2001. As amended, its statement of claim sought compensation from the Credit Union on the basis that the Credit Union was either tenant at will or tenant at sufferance and thus liable for use and occupation of the Property. Gari also advanced claim that it should be “reimbursed either as Quantum Meruit, or because [the Credit Union] has been unjustly enriched, or because the payment [of the property taxes] has created constructive trust of the $6,227.88 in the Defendant.” Without commenting on the potential merit of possible alternative arguments, observe that Gari did not advance claim either in trespass or on the basis that s. 65(5) of the PPSA itself creates cause of action. [14] The trial judge awarded Gari judgment in the amount of $6,227.88 plus costs. In so doing, he rejected the Credit Union’s contention that s. 36 of the PPSA operated to preclude Gari’s claim. [15] The trial judge found that the Credit Union was not tenant at will but that it did become tenant at sufferance when it neglected or refused to remove the Building within reasonable time. He determined the amount owing to Gari as being equal to the additional property taxes Gari had paid as result of the Building being left on the Property and reasoned as follows: [17] As am of the view that there was tenancy at sufferance, the plaintiff's damages should be assessed on the rental value. The plaintiff has established that while the building was on the site contrary to its wishes it had to pay $6,227.88 in municipal taxes levied against the building, as distinct from the land. This does not include the sum of $2,964.71 which the Credit Union paid directly to the Town of Nipawin to satisfy condition imposed by the town for the issuance of removal permit. [18] Gari claims that it received revenue from temporary storage of golf carts and for storage of bale loader. When extrapolated to the number of such units that could have been stored on the site, the rental value of the property could have been as much as $750 month. The plaintiff is willing to accept $500 month to allow for contingencies. In my view the evidence falls well short of proving that the plaintiff could have derived any rent from the property, had the building not been there, beyond the amount that the plaintiff actually recovered. On the other hand the reasonable rental value can be estimated, albeit with limitations, by reference to the amount of improvement taxes the plaintiff had to pay to keep the town from taking the property for taxes. [16] The trial judge concluded by saying that, if there was not tenancy at sufferance, he would have awarded Gari an amount for unjust enrichment in the same amount as the damages determined in connection with the tenancy at sufferance issue. [19] Having resolved the tenancy issue in the plaintiff's favour, it is not necessary to further consider the unjust enrichment claim. However had arrived at the conclusion that there was an unjust enrichment, would have assessed the damages for unjust enrichment in the same amount as the damages in lieu of rent. Whether the building was on the plaintiff's site or some other site, it would have, as commercial building, attracted municipal improvement taxes. In the absence of proof that the taxes on some other site, added to the cost of moving the building to that site, would have been less than the improvement taxes paid by the plaintiff, would have arrived at the same amount of damages using that approach. [17] The main questions raised by the Credit Union in its appeal can be summarized as follows: (a) Is s. 36 of the PPSA comprehensive code which precludes Gari’s claim?; (b) If Gari’s claim is not precluded by the PPSA, is Gari entitled to relief from the Credit Union? [18] It is also necessary to consider Gari’s cross-appeal. It alleges that the trial judge erred in failing to award damages in respect of what it refers to as the rental of the Building. [19] further note that this case was presented by both parties on the ground that the Building was fixture within the meaning of the PPSA. will accordingly proceed on that basis but do not wish to be taken as having resolved that point either one way or the other. Analysis A. Relevant Statutory Provisions [20] Section 36 of the PPSA is designed to displace the basic common law principle that goods affixed to land become part of the land. That rule, of course, generally gives priority to real property owner over financer of goods. [21] Cuming and Wood describe the effect of s. 36 in Saskatchewan and Manitoba Personal Property Security Acts Handbook, (N.p.: Carswell, 1994) at pp. 291-292: Section 36 sets out comprehensive regime that governs security interests in fixtures. In general sense, it continues the policy implicit under the older chattel security legislation by permitting secured party to remove goods that have become affixed to land. However, it puts into place four major improvements which are summarized below: (1) Section 36 adopts single policy governing security interests in fixtures. There is no longer difference in treatment depending on the form of the financing device. Section 36 applies to every type of security agreement. In addition, section 36 applies to lease of goods for term of more than one year. (2) Section 36 requires that the fixture financer register notice in the land title system in order to obtain priority over subsequent purchaser or mortgagee of land. This ensures that purchaser or mortgagee can rely on the integrity of the land titles system. (3) Section 36 creates special rule in relation to building materials. Building materials are not subject to removal pursuant to section 36. This prevents the financer from destroying building by the removal of its parts. (4) Section 36 sets out detailed procedure governing the removal of the fixtures. These provisions attempt to achieve reasonable balancing of interests between the fixture financer and the owner of land. [22] The portions of s. 36 which are most relevant to this appeal are set out below: (3) Except as provided in this section and in section 30, security interest in goods that attaches before or at the time when the goods become fixtures has priority with respect to the goods over claim to the goods made by person with an interest in the land. (9) secured party who, pursuant to this Act, has the right to remove goods from land shall exercise this right of removal in manner that causes no greater damage or injury to the land and to other property situated on it or that puts the occupier of the land to greater inconvenience than is necessarily incidental to the removal of the goods. (10) person, other than the debtor, who has an interest in the land at the time when the goods subject to the security interest are affixed to the land is entitled to reimbursement for any damages to the interest of the person in the land caused during the removal of the goods, but is not entitled to reimbursement for reduction in the value of the land caused by the absence of the goods removed or by the necessity or replacement. (11) The person entitled to reimbursement pursuant to subsection (10) may refuse permission to remove the goods until the secured party has given adequate security for reimbursement. (12) The secured party may apply to court for one or more of the following: (a) an order determining the person entitled to reimbursement pursuant to this section; (b) an order determining the amount and kind of security to be provided by the secured party; (c) an order prescribing the depository for the security; (d) an order authorizing the removal of the goods without the provision of security for reimbursement pursuant to subsection (11). (13) person who has an interest in the land that is subordinate to security interest as provided in this section may, before the goods have been removed from the land by the secured party, retain the goods on payment to the secured party of the lesser of: (a) the amount secured by the security interest that has priority over that interest; and (b) the market value of the goods if the goods were removed from the land. (14) secured party who has right to remove goods from land shall give to each person who appears by the records of the Land Titles Registry to have an interest in the land notice of the intention of the secured party to remove the goods, unless the amount mentioned in subsection (13) is paid on or before specified day that is not less than 15 days after the notice is given in accordance with subsections (15) and (16). B. The “Comprehensive Code” Argument [23] The Credit Union’s central submission is that s. 36 of the PPSA is comprehensive code which fully delineates the relative rights of financers and persons with an interest in land. It contends that the trial judge’s award effectively disregards the priority provisions of s. 36 and substitutes new remedy for the rights expressly set out in ss. 36(9) to (16). [24] am unable to accept that the PPSA goes as far as the Credit Union suggests. It is clear that s. 36 is designed to balance the rights of persons who hold security interest in goods which have become fixtures and persons who have an interest in the land to which the goods are attached. There can be no debate on that point. [25] However, it does not follow that s. 36 either can or should be read so aggressively as to exclude every cause of action or claim relating to the conduct of the financer of the goods as it affects the individual with an interest in land and vice versa. Section 36 may speak exhaustively to the relative priorities of financers and land owners in fixtures. It does not necessarily speak in that way to the full range of rights and claims which those parties might have against each other. [26] Speaking generally, see no principled basis on which person with an interest in land should be denied meaningful relief when financer, without excuse, acts in commercially unreasonable manner by failing or refusing to remove fixture after giving formal notice of its intention to do so. Denying remedy in that situation would put persons with interests in land at an unfair disadvantage vis-à-vis financers and would allow financers to effectively “store” fixtures on the property of others at no cost. The PPSA system is apt to function more fairly and effectively if financers are encouraged, through the existence of appropriate legal consequences, to remove their security within commercially reasonable time after giving notice pursuant to s. 36(14). [27] The Chambers ruling referred to above at para. 10 suggested that the appropriate remedy for person with an interest in land who wishes to have fixture removed is to seek mandatory injunction against the financer. do not mean by this decision to suggest that such an option would not be open to person with an interest in land. However, at the same time, there appears to be no reason why such person should not also be able to recover for loss or damage occasioned by commercially unreasonable failure on the part of financer to remove fixture after having given notice in that regard. [28] Section 65 of the PPSA is consistent with this view. Section 65(2) expressly states that principles of the common law, equity and the law merchant supplement the PPSA and continue to apply except to the extent they are inconsistent with the Act. Section 65(3) goes on to say that rights, duties and obligations arising under security agreement or the PPSA are to be exercised or discharged “in good faith and in commercially reasonable manner.” Further, s. 65(5) directly contemplates that where, without reasonable excuse, person fails to discharge duties or obligations under the Act, the person to whom the duty is owed has right to recover reasonably foreseeable loss or damage arising from that failure. The relevant parts of s. 65 are reproduced below: 65(1) In this section, “secured party” includes receiver. (2) The principles of the common law, equity and the law merchant, except to the extent that they are inconsistent with this Act, supplement this Act and continue to apply. (3) All rights, duties or obligations that arise pursuant to security agreement, this Act or any other applicable law are to be exercised or discharged in good faith and in commercially reasonable manner. (5) If person, without reasonable excuse, fails to discharge any duties or obligations imposed on the person by this Act, the person to whom the duty or obligation is owed has right to recover loss or damage that was reasonably foreseeable as liable to result from the failure. [29] The significance of s. 65 is recognized by Cuming and Wood in the Handbook at p. 463: Section 65(2) provides that principles of the common law, equity and the law merchant continue to apply except insofar as they are inconsistent with the provisions of the Act. The section recognizes that the Act is not complete, self-contained code of law applicable to personal property security transactions. It draws on this law as source of rules to fill the gaps in the system and to provide the basic foundation on which it is supported. For example, since the Act contains only few specific provisions relating to security agreements, the law of contract provides the basic infrastructure for regulating the rights of parties to security agreements. [Footnote omitted] [30] In this case, it is common ground that the Credit Union had right to remove the Building from the Property following Lakeland’s default. Pursuant to s. 36(14) and (15), it provided Gari with notice indicating its intention to do so within 15 days and giving Gari the right to retain the Building on payment of the indebtedness owing under the security agreement. On receipt of the notice, Gari relied on ss. 36(10) and (11) and denied the Credit Union permission to remove the Building until it was given adequate security for damage expected to be caused to its interest in the Property. [31] The Credit Union took the position in its factum that Gari refused to allow the removal of the Building until the Credit Union paid both property taxes in relation to the Building and an additional amount for “rent”. However, the record does not support that version of the facts. The affidavits filed with the Court of Queen’s Bench indicate that, although Gari claimed rent and taxes in April and July of 1999, it had changed its position as of September of that year. By September 1, Gari had retained lawyer and he indicated in letter to counsel for the Credit Union that Gari was only requesting security for the damage reimbursement. Accordingly, in my view, the analysis of the positions of the parties must proceed on that same basis, i.e. on the basis that, as of September 1, Gari was seeking security for possible damage caused by removal of the Building but was not seeking rent and reimbursement for taxes paid. [32] That said, I agree with the Credit Union that it would have been improper for Gari to deny permission to remove the Building unless the Credit Union paid an amount in respect of the property taxes attributable to it. That stance would have been inconsistent with the regime established pursuant to the PPSA. Section 36 provides only that person with an interest in land may refuse permission to remove goods until he or she has received adequate security for reimbursement of damages caused by their removal. Allowing person with an interest in land to oblige financers to pay property taxes before realizing on their security would amount to substantial realignment of the careful balance between the rights of fixture financers and holders of property interests which is reflected in s. 36. On this point agree with the observations of Ball J. in Cando Contracting Ltd. v. Sarnia No. 221 (Rural Municipality), 2002 SKQB 40 (CanLII), [2002] W.W.R. 89 at para 36. [33] In summary, find that s. 36 of the PPSA does not operate to preclude the claims advanced by Gari in this case. C. The Merits of Gari’s Claim [34] In light of my reading of the PPSA, it is necessary to consider the merits of the claims set out in Gari’s pleadings. 1. Tenancy at Sufferance and Tenancy at Will [35] Gari’s principal argument, accepted by the trial judge, is that the Credit Union was tenant at sufferance from the time Lakeland discontinued business on April 15, 1999 until the Building was removed in the fall of 2002. In my respectful opinion, the trial judge erred in his analysis of this issue and, more particularly, erred by misapprehending the nature of the legal relationship between Gari and the Credit Union. [36] The essence of tenancy is the right to possess and occupy land belonging to another. Oosterhoff and Rayner in Anger and Honsberger Real Property, 2nd ed. Vol. (Aurora: Canada Law Book, 1985) describe the basic relationship between landlord and tenant at p. 225: The relationship of landlord and tenant is created by contract expressed or implied, by which one person who is possessed with an interest in real property, and who is called the landlord or lessor, confers on another person, called the tenant or lessee, the right to exclusive possession of the real property or some part of it for period of time which is definite or can be made definite by either party, usually in consideration of periodical payment of rent either in money or its equivalent. [37] tenant at sufferance is one who, having entered on land by lawful title, continues in possession after the title has ended without obtaining the consent of the person entitled to the land. tenant at will, on the other hand, is person who possesses property under an express or implied agreement that the tenancy is determinable at the will of either party. See: Anger and Honsberger Real Property, supra, pp. 230-231; Williams and Rhodes, Canadian Law of Landlord and Tenant, 6th ed. looseleaf (Toronto: Thomson), pp. 4-2 to 4-2.1 and 4-17 to 4-19. [38] In this case, there was obviously landlord and tenant relationship between Lakeland and Gari. That relationship was created by 1997 agreement entitled “Lease with Option to Purchase”. However, Gari and the Credit Union were never landlord and tenant. At best, the Credit Union reserved security interest in goods which were affixed to the Property. The Credit Union had no right of occupancy, exclusive or otherwise. Its entitlements were defined by the financing agreement and the PPSA and related only to the existence of security interest in the Building. [39] It is also significant that Gari’s actions following the failure of Lakeland were inconsistent with the notion that the Credit Union was its tenant. The record reveals that Gari took possession of the Building and rented it out for storage of haying equipment and golf carts. These actions on its part reflect the terms of its lease with Lakeland. Paragraph 21 of the lease provides that it would be terminated if rent remained unpaid for seven days after its due date. Paragraph speaks to the disposition of building fixtures upon termination of the lease and provides that they would be owned by Gari: The lessee shall be permitted to erect or place on the land any buildings, and the lessee shall be permitted to make any improvements to the land, without requiring the consent of the lessor, provided that all buildings and improvements shall comply with any applicable laws or regulations of any relevant municipal, provincial, or federal or other authority. Upon the termination of this lease, should the lessee fail to accept the option to purchase hereunder, all buildings, fixtures and improvements made to the land shall be left on the land and shall be and become the property of the lessor absolutely, except for any portable buildings or other personal property of the lessee not affixed to the land [40] In light of the foregoing, I conclude that the Credit Union could not have been either a tenant at sufferance or a tenant at will of Gari for the fundamental reason that there was no landlord and tenant relationship between them. As a result, Gari’s claims in this regard must fail. 2. Unjust Enrichment [41] The other cause of action which Gari advanced was described in its pleadings as quantum meruit or unjust enrichment. The trial judge indicated that he would have allowed Gari to succeed on that basis if there was not tenancy at sufferance and that, if necessary, he would have awarded compensation for unjust enrichment in the same amount as the damages he awarded in connection with tenancy at sufferance, i.e. an amount equal to the property taxes paid by Gari in respect of the Building. [42] claim for unjust enrichment arises on satisfaction of three factors: (a) an enrichment, (b) corresponding deprivation, and (c) the absence of juristic reason for the enrichment. Unjust enrichment in equity permitted number of remedies including payment for services rendered on the basis of quantum meruit. See: Peter v. Beblow, 1993 CanLII 126 (SCC), [1993] S.C.R. 980. [43] In this case, Gari’s position is that the nature of the alleged unjust enrichment is the benefit gained by the Credit Union in leaving the Building on the Property from April of 1999 to the fall of 2002 rather than paying for it to be stored at some other location. Gari argues that the amount of the benefit conferred on the Credit Union is the “storage” costs it saved by proceeding in that fashion. [44] find it unnecessary to consider the substantive merits of Gari’s claim because, even assuming there was unjust enrichment in the circumstances at hand, the record does not permit determination of the amount of the benefit said to have been conferred on the Credit Union. Put more specifically, the evidence does not establish storage costs for the Building. [45] For his part, as noted, the trial judge was of the view that compensation for unjust enrichment should be in the amount of the property taxes paid by Gari in respect of the Building. However, in my respectful opinion, that line of reasoning misses the mark. As McLachlin J. observed in Peel (Regional Municipality) v. Canada, 1992 CanLII 21 (SCC), [1992] S.C.R. 762 at p. 804, it is not enough that plaintiff in an unjust enrichment case has made payment which it was not required to make, “it must also be shown that the defendant as consequence is in possession of benefit, and it is fair and just for the defendant to disgorge the benefit.” [46] There is no logical correspondence between the taxes levied in respect of the Building and the storage costs which the Credit Union avoided by leaving it on the Property. Tax liability is function of the assessed value of land and improvements. That value cannot be translated directly into the wholly separate concept of storage costs. This is particularly so for fabricated metal structure of the sort in issue here which presumably could have either been moved as whole to location outside of the Town for storage or, perhaps more likely, disassembled and stored in much smaller space than the one occupied by the Building proper. In short, the taxes paid by Gari do not equate in any way with what it says was the benefit received by the Credit Union. [47] In argument, counsel for Gari also suggested that figure of $500 per month could be used to approximate storage costs. That amount is rooted in an affidavit which indicates that Gari had rented the Building for $25 per month to store bale mover and that the Building was large enough to accommodate 30 such machines. This was seen as translating into $750 of monthly rental income. Against that figure, $500 per month was said to be reasonable estimate for storage. [48] am not persuaded of the logic of this line of thinking either. First, it is speculative at best to conclude that, because Gari had been able to rent space for the storage of single machine, it could have filled the Building with similar rentals. Indeed, if that was the case, Gari would presumably have proceeded to rent out the entire Building. Second, and more fundamentally, there is no necessary connection of any kind between the value of the rental stream the Building might generate and the cost of “storing” it. These are entirely different concepts. [49] Further, and by way of significant additional complication, some of the delay in the removal of the Building was due to the Town of Nipawin’s refusal to grant the necessary permit to the purchaser until the taxes had been paid. The Town’s position is perhaps questionable in light of s. 69 of the PPSA, but the significant point is that, in light of this issue, it is unclear how much of the delay in removing the Building can properly be laid at the feet of the Credit Union. As result, the period of time over which “storage” costs should be assessed is quite uncertain. [50] do not believe that unjust enrichment claims need be proven with precise mathematical certainty. However, Gari has failed to present evidence which would allow the Court to meaningfully quantify the benefit conferred on the Credit Union and to provide appropriate relief. As a consequence, I am of the opinion that no effect can be given to the unjust enrichment argument. [51] Gari also referred to the concept of the constructive trust in its pleadings. However, it is not readily apparent how trust would arise in the circumstances of this case and Gari quite properly did not press or develop that feature of its claim in argument before the Court. D. The Cross-Appeal [52] In its cross-appeal, Gari argues that the trial judge erred in failing to award damages in the amount of $500 per month in respect of “rent”. Gari’s approach to this part of the case was that, if the Credit Union was tenant at will or tenant at sufferance, it was obliged to compensate Gari at rate equal to the amount for which the Building could have been rented. In order to establish that amount, Gari extrapolated from evidence in the record as to the revenue it generated from storing bale mover in the Building. [53] have substantial doubts about the theory of damages expressed in the cross-appeal. However, in light of my conclusion that there was no tenancy at sufferance or tenancy at will, there is no need to explore the matter. The cross-appeal necessarily fails because there was no landlord-tenant relationship between Gari and the Credit Union. V. Conclusion [54] conclude that s. 36 of the PPSA does not preclude an action for damages in circumstances of the kind involved in this appeal. However, in light of the causes of action it plead and the evidence it brought forward, Gari’s claim against the Credit Union cannot succeed. The appeal is allowed. Further, as indicated, Gari’s cross-appeal is dismissed. [55] The Credit Union’s main argument concerning s. 36 of the PPSA failed but it nonetheless succeeded in overturning the result at trial. It will have costs in this Court in the usual way on double Column and in the Court of Queen’s Bench on the applicable schedule of the tariff. DATED at the City of Regina, in the Province of Saskatchewan, this 2nd day of August, A.D. 2005. RICHARDS J.A. concur BAYDA C.J.S.
This case concerns the fixture financing provisions of The Personal Property Security Act, 1993 (PPSA). The respondent claims damages from the appellant Credit Union. The claim arises from the Credit Union's delay in removing a Quonset in which the Credit Union held a security interest. The trial judge found in favour of the respondent and awarded damages on the basis that the Credit Union became a tenant at sufferance of the respondent when it failed to remove the Quonset and therefore was obliged to pay rent. The issue is whether the PPSA precludes a claim by a land owner against a financer arising from the financer's failure to remove a fixture within a commercially reasonable time after giving notice of its intentions in that regard. HELD: Appeal allowed. Cross appeal dismissed. In light of the causes of action pled and the evidence brought forward, the respondent's claim against the Credit Union cannot succeed.  1) Section 36 of the PPSA may speak exhaustively to the relative priorities of financers and land owners in fixtures. It does not necessarily speak in that way to the full range of rights and claims that those parties might have against each other. There is no principled basis on which a person with an interest in land should be denied meaningful relief when a financer, without excuse, acts in a commercially unreasonable manner by failing or refusing to remove a fixture after giving formal notice of its intention to do so. 2) It would have been improper for the respondent to deny permission to remove the building unless the Credit Union paid an amount in respect of the property taxes attributable to it. Allowing a person with an interest in land to oblige financers to pay property taxes before realizing on their security would amount to a substantial realignment of the careful balance between the rights of fixture financers and holders of property interest reflected in s. 36 of the PPSA. 3) The Credit Union could not have been either a tenant at sufferance or a tenant at will of the respondent for the fundamental reason that there was no landlord and tenant relationship between them. The respondent's claims in this regard fail. 4) The respondent has failed to present evidence that would allow this Court to quantify the benefit conferred on the Credit Union and to provide appropriate relief. As a consequence, no effect can be given to the unjust enrichment argument. 5) In light of the conclusion that there was no tenancy at sufferance or tenancy at will, the cross-appeal fails.