Big Sky Farms Inc. et al., Re,

• Jurisdiction: Saskatchewan
• Judge: Gabrielson, J.
• Neutral Citation: 2010 SKQB 255
• Citation: 2010 SKQB 255,(2010), 360 Sask.R. 76 (QB),70 CBR (5th) 88,[2010] SJ No 407 (QL),360 Sask R 76,360 SaskR 76,[2010] S.J. No 407 (QL),(2010), 360 SaskR 76 (QB),360 Sask.R. 76
• Date: 20 July 2010
• Court: Court of Queen's Bench of Saskatchewan (Canada)

Big Sky Farms Inc., Re (2010), 360 Sask.R. 76 (QB)

MLB headnote and full text

Temp. Cite: [2010] Sask.R. TBEd. JL.050

In The Matter Of the Companies' Creditors Arrangement Act, R.S.C. 1985, C. C-36, as Amended (The "CCAA")

And In The Matter Of a Proposed Plan of Arrangement for the Creditors of Big Sky Farms Inc., Drycast Systems Inc. and Big Sky Management Consulting Corp.

(2009 Q.B.G. No. 1461; 2010 SKQB 255)

Indexed As: Big Sky Farms Inc. et al., Re

Saskatchewan Court of Queen's Bench

Judicial Centre of Saskatoon

Gabrielson, J.

July 20, 2010.

Summary:

In November 2009, Big Sky Farms Inc. applied for court protection under the Companies' Creditors Arrangement Act. In December 2009, Big Sky presented a plan to its creditors and the court. Alberts Construction Ltd. (Alberts) submitted a claim alleging that Big Sky was indebted to it in the amount of $2,373,790.60 for work done for Big Sky in 2004. The Monitor disallowed the claim on the basis that Alberts had been paid in full for the work and, alternatively, that the claim would be statute barred by the expiration of the limitation period. Alberts filed a dispute note.

The Claims Officer held that Alberts had failed to prove the claim on a balance of probabilities and, further, that the claim would be statute barred except for the sum of $68,899.66. Alberts appealed.

The Saskatchewan Court of Queen's Bench dismissed the appeal.

Creditors and Debtors - Topic 8600

Debtors' relief legislation - Companies' creditors arrangement legislation - Limitation periods - At issue in this appeal was whether the Limitations Act applied to a notice of claim filed pursuant to the Companies' Creditors Arrangement Act (CCAA) - The Saskatchewan Court of Queen's Bench began its analysis by considering the purpose of a statute of limitations - "Although the CCAA does not have an express purpose clause, it is titled 'an Act to facilitate compromises and arrangements between companies and their creditors'. This title can be taken to suggest that its purpose was to assist insolvent companies in achieving arrangements with creditors so that the company could find a way to continue operations and avoid bankruptcy" - See paragraph 34.

Creditors and Debtors - Topic 8600

Debtors' relief legislation - Companies' creditors arrangement legislation - Limitation periods - When considering whether the Limitations Act applied to proceedings pursuant to the Companies' Creditors Arrangement Act (CCAA), the Saskatchewan Court of Queen's Bench noted the connection between the CCAA and the Bankruptcy and Insolvency Act (BIA) - Some sections of the CCAA made specific reference to the BIA - Numerous cases held that limitation periods applied to claims under the BIA - Other cases also held that a provable claim in bankruptcy proceedings had to be one recoverable by legal process and therefore not one for which the limitation period had already run - As s. 2 of the CCAA required that the claim be "provable" within the meaning of the BIA, the court was satisfied that the claims officer was correct in his determination that the Limitations Act applied in the circumstances of this case - See paragraphs 35 to 41.

Creditors and Debtors - Topic 8600

Debtors' relief legislation - Companies' creditors arrangement legislation - Limitation periods - A claims officer determined that the majority of the claim for work done in 2004 was barred by the expiry of the limitation period, having found that the claimant was aware of the work it had done and could have pursued a claim but chose not to do so - On appeal, the claimant's position was that its claim was not time barred because it did not discover its claim until the spring of 2009 when the debtor's employee advised the claimant that the debtor would not pay any more money for work done - The Saskatchewan Court of Queen's Bench dismissed the appeal - Section 5 (basic limitation period of two years from the day on which the claim was discovered), s. 6 (discovery of claim) and s. 18 (burden of proof) of the Limitations Act were relevant to the issue - Spring of 2009 was not the date for discovery of the claim as required by the Act but, rather, only discovery of the non-payment of its claim - See paragraphs 42 to 45.

Creditors and Debtors - Topic 8600

Debtors' relief legislation - Companies' creditors arrangement legislation - Limitation periods - Section 17 of the Limitations Act provided that the limitation periods established by the Act would not apply if there had been a wilful concealment by the party against whom the claim was made - The position of the claimant was that the debtor failed to provide a report such that the claimant was not in a position to invoice the debtor for the work that had been done - There was no evidence tendered before the claims officer that there had been any "wilful concealment" of the report - The claims officer found that "sloppy record-keeping" was not wilful concealment - The Saskatchewan Court of Queen's Bench concluded, as did the claims officer, that the claimant had not met the onus of proving that the debtor had wilfully concealed the information - In any event, the limitation period found in s. 5 of the Act commenced on the day on which the claim was discovered, not when the claimant discovered the precise amount of the claim - See paragraphs 46 to 49.

Statutes - Topic 1623

Interpretation - Extrinsic aids - Other statutes - Related statutes - [See second Creditors and Debtors - Topic 8600 ].

Statutes - Topic 1846

Interpretation - Intrinsic aids - Titles, headings and section numbers - Titles - [See first Creditors and Debtors - Topic 8600 ].

Cases Noticed:

Housen v. Nikolaisen et al., [2002] 2 S.C.R. 235; 286 N.R. 1; 219 Sask.R. 1; 272 W.A.C. 1; 2002 SCC 33, refd to. [para. 8].

1587930 Ontario Inc. et al., Re, [2006] O.T.C. Uned. A46; 25 C.B.R.(5th) 264 (Sup. Ct.), refd to. [para. 9].

Triton Tubular Components Corp. v. Steelcase Inc. et al., [2005] O.T.C. 809; 14 C.B.R.(5th) 264 (Sup. Ct.), refd to. [para. 9].

F.H. v. McDougall, [2008] 3 S.C.R. 41; 380 N.R. 82; 260 B.C.A.C. 74; 439 W.A.C. 74; 2008 SCC 53, refd to. [para. 14].

Dwyer v. Mark II Innovations Ltd. (2006), 208 O.A.C. 305 (C.A.), refd to. [para. 17].

Murray v. Saskatoon (City), [1952] 2 D.L.R. 499 (Sask. C.A.), refd to. [para. 18].

Harmony Shipping Co. SA v. Davis, [1979] 3 All E.R. 177 (C.A.), refd to. [para. 19].

S.M. v. Canada (Attorney General) (2005), 271 Sask.R. 123; 2005 SKQB 351, refd to. [para. 19].

K.M. v. H.M., [1992] 3 S.C.R. 6; 142 N.R. 321; 57 O.A.C. 321, refd to. [para. 31].

Josvanger v. Folk et al. (2005), 275 Sask.R. 101; 365 W.A.C. 101; 2005 SKCA 138, refd to. [para. 32].

Reference Re Debt Adjustment Act 1937 (Alberta), [1943] 2 D.L.R. 1 (P.C.), refd to. [para. 38].

Hamar, Re (1921), 63 D.L.R. 241 (Sask. K.B.), refd to. [para. 39].

Farm Credit Corp. v. Holowach (Bankrupts) (1988), 86 A.R. 304; 51 D.L.R.(4th) 501 (C.A.), refd to. [para. 40].

Morton, Re (1922), 66 D.L.R. 378 (Sask. Q.B.), refd to. [para. 40].

Nielsen v. Kamloops (City) and Hughes, [1984] 2 S.C.R. 2; 54 N.R. 1, refd to. [para. 44].

Central Trust Co. v. Rafuse and Cordon, [1986] 2 S.C.R. 147; 69 N.R. 321; 75 N.S.R.(2d) 109; 186 A.P.R. 109, refd to. [para. 44].

Placzek v. Green (2009), 245 O.A.C. 220; 307 D.L.R.(4th) 441; 2009 ONCA 83, refd to. [para. 44].

Pusch v. Freshair Enterprises Ltd. et al., [2007] 11 W.W.R. 1; 293 Sask.R. 289; 397 W.A.C. 289; 2007 SKCA 60, refd to. [para. 49].

Stomp Pork Farm Ltd. v. Lombard General Insurance Co. of Canada et al., [2009] 4 W.W.R. 483; 316 Sask.R. 262; 2008 SKQB 405, refd to. [para. 49].

Statutes Noticed:

Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3, sect. 2 [para. 36]; sect. 121(1) [para. 37].

Companies' Creditors Arrangement Act, R.S.C. 1985, c. C-36, sect. 2(1) [para. 35].

Limitations Act, S.S. 2004, c. L-16.1, sect. 5, sect. 6 [para. 42]; sect. 17 [para. 46]; sect. 18 [para. 42].

Counsel:

Kevin C. Mellor, for the appellant, Alberts Construction Ltd.;

Jeffrey M. Lee and Naheed Bardai, for the respondent, Big Sky Farms Inc.

This appeal was heard before Gabrielson, J., of the Saskatchewan Court of Queen's Bench, Judicial Centre of Saskatoon, who delivered the following judgment on July 20, 2010.